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Edited Transcript of PIIND.NSE earnings conference call or presentation 26-Jul-19 4:30am GMT

Q1 2020 PI Industries Ltd Earnings Call

Aug 10, 2019 (Thomson StreetEvents) -- Edited Transcript of PI Industries Ltd earnings conference call or presentation Friday, July 26, 2019 at 4:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Mayank Singhal

PI Industries Limited - Executive Vice-Chairman & MD

* Rajnish Sarna

PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director

* Subhash Chnad Anand

PI Industries Limited - CFO

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Conference Call Participants

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* Abhijit R. Akella

IIFL Research - VP

* Aditya Jhawar

Investec Bank plc, Research Division - Analyst

* Bharat Shah

ASK Investment Managers Limited - Executive Director

* Madanagopal Ramu

Sundaram Asset Management Company Ltd. - Head of Equity Research & Assistant Fund Manager

* Nihal Mahesh Jham

Edelweiss Securities Ltd., Research Division - Research Analyst

* Nitin Agarwal

IDFC Securities Limited, Research Division - Analyst

* Prashant Biyani

Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst

* Rajesh Kothari

AlfAccurate Advisors Pvt. Ltd - Founder, MD & Director

* Rishab Bothra

Sharekhan Limited, Research Division - Equity Research Analyst

* Ritesh Gupta

AMBIT Capital Private Limited, Research Division - Analyst of Agro Chemicals

* Saurabh Jain

HSBC, Research Division - Analyst

* Sumant Kumar

Motilal Oswal Securities Limited, Research Division - Research Analyst

* Vishnu Kumar A.S.

Spark Capital Advisors (India) Private Limited, Research Division - VP

* Nishid Solanki

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to the PI Industries Q1 FY '20 Earnings Conference Call. (Operator Instructions) I now hand the conference over to Mr. Nishid Solanki from CDR India. Thank you and over to you, sir.

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Nishid Solanki, [2]

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Thank you. Good morning, everyone, and thank you for joining us on PI Industries Q1 FY '20 Earnings Conference Call. Today, we are joining us by senior members of the management team including Mr. Mayank Singhal, Managing Director and CEO; Mr. Rajnish Sarna, Executive Director; and Mr. Subhash Anand, Chief Financial Officer. We will begin the call with key thoughts from Mr. Singhal, thereafter, we will have Mr. Subhash Anand sharing his views on the financial performance of the company. After the opening remarks from the management, the forum will be open for question-and-answer session.

A cautionary note: Before we begin, certain statements made or discussed on the conference call today may be forward-looking statements, and a disclaimer to this effect has been included in the press release shared with you earlier.

I would now like to request Mr. Singhal to share his perspectives with you. Thank you, and over to you, sir.

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [3]

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Yes. Thank you. A very good afternoon, to everyone, and thanks for joining us in today's call post-earnings discussions. I'm once again pleased to share that PI yet again has delivered a healthy performance driven by the growth in exports.

Just to share a quick highlight of Q1. Revenue grew by 25%, EBIT saw an increase by 28%, translating to net profits of 21.1%. We are able to achieve this earning growth in Q1 despite something of onsets of domestic seasons, mainly driven by the uptick in demand and a global customer from several of our exports products.

On the export front, we continue to -- efforts on debottlenecking our existing capacities and addition into our new plants and be able to ramp up the quarterly rate of exports over the last few quarters with the commissioning of 2 more plants in the fiscal year. The plant export volume will further increase in the following quarters. We have commercialized one new product in quarter 1, and [all departments have been] exciting with 2 to 3 new commercializations in line with our plans.

On the Energy front, our agro-climatic conditions have not been conducive in Q1 with delayed monsoons, erratic rainfalls, disrupting rain patterns and pace. Besides the AgChem industry also witnessed constrained demand, owing to lower header commodity prices and weaker early season resulting in high inventories in the channel. However, for the branded portfolio products, we still been able to do reasonably well on a higher base growth last year. We introduced Cosco SC, an insecticide used for multicrops this season to complete the granular formulations which was launched last year.

Our branded portfolio continues to attract dedicated audience amongst farmers seeking to sustainably enhance the farmer productivity. Progress in latest technology products and R&D is satisfactory, and we surely opened up new horizons for the company in the coming years.

Outlook for the year '20 remains robust with good visibility of order book for exports. The monsoons are delayed, have concerned most of the important agricultural areas, but now, the swing has been seen improving from the last 1 month. We are consciously monitoring the overall movement of trade inventories. We expect the consumption to pick up in Q2 or Q3, along with increased sowings in domestic business should also be reasonably well in the end of the year.

With that, I will request our CFO to continue, Subhash Anand, take the discussions forward. Thank you, and over to you, Subhash. Thanks.

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Subhash Chnad Anand, PI Industries Limited - CFO [4]

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Thanks, Mayank, and good morning, everyone. I'm glad to share financial highlights for the quarter of financial year '20. During the quarter under review, our total revenue stood at INR 754 crores, growth of 25% as compared to same period last year. Growth was mainly driven by export. This is 59% increase Y-o-Y basis. That is upfront INR 314 crores to INR 501 crores as a result of increased demand for commercialized molecule as well as additions of new molecules.

Domestic sales reflected a decline of 13% during the quarter, down from INR 291 crores to INR 253 crores. On account of delayed and erratic nature of southwest monsoon and high trade inventory, that led to dampening in industry demand.

EBITDA for the quarter stood at INR 115 crores, higher by 28% Y-o-Y basis, while the margin came at 20.1%. This was despite the pressure from the domestic business and ramp-up in costs pertaining to commissioning of new manufacturing plant.

Profit after tax for the first quarter stood at INR 101 crores as compared to INR 82 crores in the corresponding quarter last year, representing a growth of 23%.

Improvement in our performance has further strengthened the balance sheet position for the quarter. Our net debt to equity continue to be nearly 0 level and cash surplus at INR 165 crores. I would like to reiterate that we remain confident of delivering 20%-plus growth -- revenue growth in the financial year 2020, with 50 to 100 basis point improvement in the EBITDA margin as guided earlier.

Our current order book stands firm at INR $1.4 billion. CapEx for the current year continue to be in the range of INR 400 crores to INR 450 crores, while we have spent INR 160 crores CapEx so far in Q1 FY '20.

With that, I conclude my remarks, and I would now request the moderator to open the forum for Q&A. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Ritesh Gupta from AMBIT Capital.

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Ritesh Gupta, AMBIT Capital Private Limited, Research Division - Analyst of Agro Chemicals [2]

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So wonder if you could just tell us on the CapEx side. Is there an upgrade? Because I think you were talking about INR 300 crores, INR 350-odd crores CapEx in the last call. So -- and if you could just give us a sense of like what could be the FY '21 CapEx, like if you have any visibility on that side as well. And I believe that this is -- I mean, this is basically for the 2 plants that gets commissioned by the end of this year.

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Subhash Chnad Anand, PI Industries Limited - CFO [3]

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Ritesh, the CapEx guidance continues to be same. We are maintaining INR 400 crores to INR 450 crores range of CapEx this year. The same communicated even in our last conference call also. So no change in the guidance.

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Ritesh Gupta, AMBIT Capital Private Limited, Research Division - Analyst of Agro Chemicals [4]

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Okay. And on the outlook on the domestic side, as in what's the outlook on that side for the full year? How does it change after the first quarter being weak?

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [5]

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Right. So if we were to look at the domestic side, we would look at the -- obviously the season has been delayed, the same patterns have been weak. There has been a weakening of the whole agri sector over the last couple of years. We're hoping that if it's a good monsoon and with a bunch of new products, we should be able to catch up. And I think overall, if I see the domestic business in India, I would be -- would not be looking for any aggressive growth but would be pretty flat to better, if I was to overall look at the position for the country in the agrochemical sector.

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Ritesh Gupta, AMBIT Capital Private Limited, Research Division - Analyst of Agro Chemicals [6]

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Got it. And just a last bit on the CSM side, I mean, there has been incremental worries around kind of the trade wars, et cetera, leading to some delay in the recovery for the agrochemical market and kind of the top global guys like BASF, et cetera, have reported, and they've reported -- they're guiding for a pretty bad quarter this time and same goes with ADAMA as well. So should we just put that in perspective how does it impact your business? How -- what -- how kind of global inventory level that they are in the -- on the product side at the global level? If you could just give us some perspective on that side, that will be helpful.

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [7]

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So if you look at our business, we, based on the order book position and researches, continue to maintain our guideline on that. But if we look at the opportunity area that we are working in, it will be on the innovative side. And that could be some of these products in stretch markets continue to keep the demand and continue to grow unlike where there's a huge swing in the (inaudible), which comes along with gendered products. So the areas that we've chosen, we see still the positives. They may not be super positive and maybe positive, and we are pretty confident that the guideline that we've given would be maintained.

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Ritesh Gupta, AMBIT Capital Private Limited, Research Division - Analyst of Agro Chemicals [8]

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Okay. Okay. And just a last bit on the -- you have just added a new line in the press release that you kind of released, I mean, the fine chemicals bit. So if you could just update us on the fine chemicals side. What's happening on that side, R&D? And probably we're looking for some pharma acquisition as well. So if any update on that side?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [9]

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Well, currently, we are evaluating certain options but nothing that I'd want to say at this point. So as the -- we have been telling in our previous calls as well that we are very actively looking at various opportunities of inorganic growth and we shall certainly update the investors as and when we reach to advanced stage.

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Ritesh Gupta, AMBIT Capital Private Limited, Research Division - Analyst of Agro Chemicals [10]

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Okay. Okay. And just thoughts on the fine chemical side? I mean, what kind of products you are looking at? What areas you are looking at?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [11]

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So this is generally -- as we have been telling that we are gradually diversifying from pure AgChem play to other specialty chemicals also, like electronic chemicals and imaging chemicals, pharma early intermediate, not the advanced APIs but early intermediate. So some part of work is already going on with all the chemistry platforms are common. And since we have been working on these -- some of these new technologies, we are also getting some headway in these other verticals as well other than agrochemicals.

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Ritesh Gupta, AMBIT Capital Private Limited, Research Division - Analyst of Agro Chemicals [12]

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Okay. Okay. And when you say headways, is it like you are still working on the -- building the product capabilities? Or you are kind of working the declines on some bit of, let's say, trials or something like that?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [13]

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So we have several products in our R&D pipeline and some of these products, we are also working at pilot stage. So a small quantity, like, 5x, 10x kind of volumes. These are not very small also but these are not large volumes. But this is the stage we are at this point.

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Operator [14]

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The next question is from the line of Abhijit Akella from India Infoline.

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Abhijit R. Akella, IIFL Research - VP [15]

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Congratulations on a good quarter in a challenging environment. Just one clarification on CSM first. The revenue growth here is very strong this quarter, 59% in the context of your 25% growth guidance for the full year. So just to understand whether there's been any front-ending of the revenues this quarter? And is there a chance that you could exceed your guidance for the full year?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [16]

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Well, frankly, this is looking a little steep because if you see our last year's same quarter, we were almost flat. And therefore, once we have ramped up the quarterly run rate, this is looking a little steep in the first quarter. But as you would see that in the following quarters, last year also, we had registered 30% to 40% growth. So this sort of steep growth won't be there but as we mentioned earlier that we are still confident of registering 20% to 25% kind of growth on an annual basis.

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Abhijit R. Akella, IIFL Research - VP [17]

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Got it. Understood, sir. And Mr. Singhal, on the domestic business, had just made a comment about expecting the industry to be flat to slightly better. I just wanted to understand whether that was for the 1Q or the Kharif season? Or is that an outlook for the full year?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [18]

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No. So I think the idea was that obviously it is not easy to kind of predict the annual performance because right now, we are only talking about the first Kharif season. So although the monsoon got delayed and then there is erratic rainfall, but in the first 15, 20 days of July, there is significant improvement in terms of sowing. There is increased sowing now. So we are hoping that the loss of revenues for the industry we are talking here, loss of revenue should get majorly recovered in the remaining Kharif season. As regards to rabi, I mean, again, depending on how this rainfall and monsoon performance goes and the reservoir situation, overall sowing situation in Kharif, lots will depend on that, that finally, what is the kind of sowing plans and how aggressive is the sowing plan comes out for rabi. But yes, for Kharif, the expectations are that it should, by the end of Kharif season, it should be able to balance the overall revenues. And there could be a low single-digit growth also if everything goes as it looks.

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Abhijit R. Akella, IIFL Research - VP [19]

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Right. And that's for the market, I presume? And for yourself, you would expect to be slightly better than the industry in the domestic business?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [20]

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Yes, marginally. I mean, again, depending on the overall situation, I'm expecting that this -- with this increased sowing, things have started moving starting July. So we also expect that by the end of season, I mean, lower single-digit kind of situation should be there. We are also -- we also have plans of introduction of new products in the next half. So overall, I mean, for the year, we still remain positive. If not high double digit, we should still be able to -- high single-digit kind of growth that we are anticipating at this point.

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Abhijit R. Akella, IIFL Research - VP [21]

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Sure. Understood, sir. And one last thing and I will just get back into queue. Subhash, if you could just help us with the Ind AS 116 impact on EBITDA and the D&A and finance cost lines?

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Subhash Chnad Anand, PI Industries Limited - CFO [22]

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Okay. Ind AS 11 impact in these financials on EBITDA is 0.5%. The EBITDA got improved by 0.5% because of Ind AS adjustment. And -- but bottom line is neutral because the same cost has got distributed between interest and depreciation.

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Operator [23]

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The next question is from the line of Aditya Jhawar from Investec.

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Aditya Jhawar, Investec Bank plc, Research Division - Analyst [24]

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Congrats for a great set of numbers. In continuation to the previous participant's question, sir, I mean, we are seeing some headwinds in terms of the Midwest flood and also the heatwave in Europe. And our growth has been pretty outstanding. So -- and are you getting a sense of any deferment of shipments by -- from the customers? Because what we understand is that if the farm economics is also not favorable, generally, there is down-trading towards generic products. So are we seeing some kind of deferment in second half of this year?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [25]

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Not really. As we mentioned, yes, there are kind of mixed results that we are seeing. Some of these companies have posted flat or some degrowth. And the commodity prices and all that, yes, absolutely right, but at the same time there are few companies who have done reasonably well also. And ultimately, it all depends on the kind of product portfolio that we are dealing in because several products are doing very well. And we have got very clear visibility, not only for this year but for coming few years. This is that, at this point in time, we are not kind of experiencing any deferment or kind of reversals. So we are continuing as per our plans and for these products, our customers are also seemingly very confident of product and raising these volumes.

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Aditya Jhawar, Investec Bank plc, Research Division - Analyst [26]

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Okay. Sarnaji, if you can help us understand the visibility in terms of your expectation of growth from existing molecules. Or are you seeing a pipeline of that new molecule will contribute in the growth -- commercialization of new molecule in second half of the year and next year? If you can break up the visibility that you're seeing.

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [27]

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Yes. I mean, I can try, maybe not in specific numbers but what I can tell you is that for the current year and next year, there is absolute clear visibility of the existing products growth, okay? And it should be more than 75-odd percent of the existing is coming from there. We are also introducing new products. Already in first quarter, we have introduced one. In the second half also, there are a couple of products that we are adding. But as we have explained in past as well that in this business model, initial years are not very high volumes of these products that we introduce. But yes, there is very clear visibility of where this growth is coming. So this is about the commercialized products. Apart from this, we have a very robust R&D pipeline. Because of the current uncertainty scenario in China and also like the other gentleman was talking about, these trade wars resulting in some sort of nervousness at these global companies, there's a lot of business new inquiries, which are flowing to this part of the world. And PI being one of the frontrunners in this industry, I mean, in plants business, we are also kind of getting benefited. So the R&D pipeline is also quite robust. Lots -- the progress is also good there, and the conversion has also improved over last, I would say, couple of years. So that would also benefit and also helping us in improving the visibility -- overall visibility of this business model over next, say, 3, 4, 5 years. I hope this answers your question.

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Aditya Jhawar, Investec Bank plc, Research Division - Analyst [28]

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Yes. Absolutely. That was extremely helpful. Sir, last question. Sir, in -- one of the comments that Mayank made was on new growth avenues, R&D-led new growth avenues. So if you can elaborate a little bit on that.

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [29]

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Well, I tried to answer this in previous participant's question that apart from agrochemicals because we are now kind of -- we are taking a technology approach, not the product approach. So we are not focusing our R&D work on product, rather, we are focusing on specific technologies. Now what happens that these technologies and [chemical] platforms, they're also giving us opportunity to work in other verticals because these platforms are having inroads in those other verticals also, like pharma, like the imaging chemicals, other specialty chemicals. So because of that work, I mean, we are also getting now good inquiries. A lot of work is happening in R&D at below pilot scale and all. And we expect that with the decent work in that area, it would certainly open up new opportunities for us going forward.

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Operator [30]

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The next question is from the line of Madanagopal from Sundaram Mutual Funds.

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Madanagopal Ramu, Sundaram Asset Management Company Ltd. - Head of Equity Research & Assistant Fund Manager [31]

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My first question is on -- you mentioned that the inquiries are looking good. We know that China is going through the phase of setting things right. So given these scenarios, you have maintained your CapEx, but are you -- are we little cautious that we don't want to put more on the table given the global scenario? Or you think the work in progress and there's a possibility that CapEx numbers can inch up in the -- as we move forward closer to the end of the year?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [32]

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Yes. So I mean as you would know that for years being in this business model, we are always very cautious in terms of putting a seal on ground. And that is the reason that we always get into long-term understanding before putting a seal on ground. Yes, because of spurt in R&D pipeline, a lot of good opportunities are coming our way. And as we mentioned during the last call also that this CapEx plan of around INR 400-odd crores is basis our current estimates of new products, commercialization and ramp-up in existing product volumes and all that. And if some more products, big volumes also, then -- that's converted, then of course, yes, I mean, by going through -- by following our regular process of getting into long-term understanding contracts and all, we may review our CapEx plan, certainly.

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Madanagopal Ramu, Sundaram Asset Management Company Ltd. - Head of Equity Research & Assistant Fund Manager [33]

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Okay. Second is I see a gross margin contraction this quarter. This might be due to mix, but generally what is your sense on the raw material front on both these businesses, sir?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [34]

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Yes. So raw material, some parts is because of some sort of issues, uncertainties in China. I mean, again, a mixed bag. Some raw material cost has gone up, some raw material cost has gone down. But it is primarily because of product mix that the gross margin is a little lower in this quarter versus...

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Madanagopal Ramu, Sundaram Asset Management Company Ltd. - Head of Equity Research & Assistant Fund Manager [35]

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In terms of cost.

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [36]

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Yes.

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Madanagopal Ramu, Sundaram Asset Management Company Ltd. - Head of Equity Research & Assistant Fund Manager [37]

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But you don't see any threat to the margin, sir. We can maintain that. Or is there a chance of margins improving in the second half?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [38]

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Yes, I mean, as I've said that we should be able to maintain it. I mean...

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Subhash Chnad Anand, PI Industries Limited - CFO [39]

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Yes, we communicated EBITDA margin. Yes, we do see 50 to 100 basis improvement full year basis. So we are still holding our guidance on that basis.

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Madanagopal Ramu, Sundaram Asset Management Company Ltd. - Head of Equity Research & Assistant Fund Manager [40]

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Is this 50 bps due to the Ind AS change or over and above that?

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Subhash Chnad Anand, PI Industries Limited - CFO [41]

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Over and above that.

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Operator [42]

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The next question is from the line of Vishnu Kumar from Spark Capital.

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Vishnu Kumar A.S., Spark Capital Advisors (India) Private Limited, Research Division - VP [43]

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My first question is relating to the 2 new plants that are coming up and the 2 ones that have just started up. Is there any of the product that finds application in the pharma space as well?

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [44]

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No. There are some intermediates we're going to have in specialty areas but not in the pharma space yet.

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Vishnu Kumar A.S., Spark Capital Advisors (India) Private Limited, Research Division - VP [45]

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Got it. Got it, sir. And secondly, just wanted to understand the wheat herbicide. Are we on track to launch for the rabi season this time?

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [46]

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Yes. We hope to do that based on the structure -- the approvals coming in terms of the regulatory authorities.

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Vishnu Kumar A.S., Spark Capital Advisors (India) Private Limited, Research Division - VP [47]

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Okay. And one final question to Mr. Subhash sir. Sir, if you could just give me the product revenue build but not dispatched because of the accounting change we've started for FY '19 for this quarter.

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Subhash Chnad Anand, PI Industries Limited - CFO [48]

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In fact, now, these numbers have pretty normalized, when I say, if I see a March quarter and June quarter, the number remains broadly same.

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Vishnu Kumar A.S., Spark Capital Advisors (India) Private Limited, Research Division - VP [49]

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And that would be roughly -- what is the number, sir?

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Subhash Chnad Anand, PI Industries Limited - CFO [50]

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No. Vishnu, I'm saying, it's -- now it's the standard way of reporting and this number is part of standard reporting. So it's not right to track this number quarter on quarter, unless it sees a major variation, and we are not experiencing major variation in this.

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Operator [51]

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The next question is from the line of Rajesh Kothari from AlfAccurate Advisors.

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Rajesh Kothari, AlfAccurate Advisors Pvt. Ltd - Founder, MD & Director [52]

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Congratulations for a good set of numbers. My first question is with reference the domestic market. You had one product, the wheat herbicide. What is the status of that?

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Subhash Chnad Anand, PI Industries Limited - CFO [53]

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In fact we got the approval just, so the product is planned for rabi so we are going after plan.

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Rajesh Kothari, AlfAccurate Advisors Pvt. Ltd - Founder, MD & Director [54]

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I see. Okay, good. Second question is, what is the current gross block for installing the SEZ plant?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [55]

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Gross block, sorry?

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Rajesh Kothari, AlfAccurate Advisors Pvt. Ltd - Founder, MD & Director [56]

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I mean, of the total stalling SEZ plant, what is the total gross block? Sir, is it possible that the gross block of [June and the 2 plants] separate chart that is coming...

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [57]

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Rajesh, it may not be readily there. You may check with our finance team separately.

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Rajesh Kothari, AlfAccurate Advisors Pvt. Ltd - Founder, MD & Director [58]

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Okay. Fine. And the last question is since you mentioned that you have a strong visibility. Typically, what kind of asset times one should assume over a period of, say, 2, 3, 4 years? And how do you see the ramp-up of that?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [59]

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Well, it varies from product to product, we can't generalize. But yes, I believe that we have explained in past as well that's anywhere between 1.25 to 1.75.

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Rajesh Kothari, AlfAccurate Advisors Pvt. Ltd - Founder, MD & Director [60]

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So basically, what I'm trying to understand is that you have INR 450 crores CapEx in FY '20 and another INR 450 crores in FY '21, so INR 900 crores of CapEx can basically give you 1.75x would be about INR 1,600 crores kind of revenue over a period of, say, at the end of third year, second year, first year, and how do you see that?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [61]

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Yes. With the mathematics in Excel. And often so I mean, the maximum level of -- you've taken the higher ends of investments as well as the alternate asset cover -- asset turns. But as I said, in these products, when you start, you will start with lower volumes. But obviously, plant investments are not made keeping 1 or 2 or 3 years in mind, these are long-term investments, and several products are there so these investments are made 8, 10 years, keeping in mind that kind of future perspective of these products. So you will start with a lower volume value. And then within 3 to 4 years, you would be reaching a reasonable, optimum level, say, 85% -- 80%, 85% kind of plant capacity utilization. And that's when you kind of reach to these 1.25, 1.5 kind of asset turn.

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Rajesh Kothari, AlfAccurate Advisors Pvt. Ltd - Founder, MD & Director [62]

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What I understand correctly is...

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [63]

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And maybe have a separate discussion and create a metric that how this INR 450 crores or INR 400 crores, starting with maybe one or less than one, how this will mature in 4 to 5 years or 3 to 4 years.

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Rajesh Kothari, AlfAccurate Advisors Pvt. Ltd - Founder, MD & Director [64]

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Oh, yes, sure. We'll take question off-line.

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Operator [65]

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The next question is from the line of Sameer Shah from Valuequest.

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Unidentified Analyst, [66]

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This is [Naveen] here. Congratulations for a good set of numbers. Sir, as you had mentioned in the last quarter that our capacity utilization then stood at around 90%. So I'm just trying to understand where did this growth come from because we were at 90% utilization as on last quarter.

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [67]

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Yes. Two things. As we have also tried to explain in our release that a lot of efforts have been put in in terms of debottlenecking the existing capacities. A lot of effort have been put in and we have got good results. That has also helped us ramp up the revenues. And secondly, we had also kind of commercialized one new plant at almost the end of last year. So that has also helped us increase the revenues in this quarter.

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [68]

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And entirely -- as we mentioned that the capacity revenue and turnover are not linear in nature. You could have an asset delivering a lower-value product and -- whereas the same could be delivering a higher-value product. So product also plays a role. It's just not -- it's not a coefficient of A, B, C.

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Unidentified Analyst, [69]

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Correct. And sir now -- so 2 new plants that we are working on right now, what is the timeline for those?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [70]

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One is expected to get commissioned somewhere next quarter, and another one is expected to get commissioned in the fourth quarter.

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Unidentified Analyst, [71]

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Okay. So Q3 and Q4 would be when we'll see these -- both the plants?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [72]

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Yes, yes. You're right.

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Unidentified Analyst, [73]

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Yes. And sir, secondly, on this -- so Nominee Gold Bispyribac Sodium, the domestic manufacturing that was going to begin this year, so where are we on that?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [74]

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Yes. So that is also -- as now we have got the registration and all other regulatory formalities are complete, and we are expecting that to start in next couple of months.

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Unidentified Analyst, [75]

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In next couple of months. But do have the capacities ready for that?

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [76]

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Yes, yes. We have already commissioned and trial runs have already been completed.

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Operator [77]

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The next question is from the line of Saurabh Jain from HSBC.

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Saurabh Jain, HSBC, Research Division - Analyst [78]

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Just seeking some clarifications on the plants. So one plant is -- was commissioned in February, right? After that, 2 more were supposed to commission early next year. But -- so have they been preponed now to Q3 and Q4?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [79]

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I think, some gap, so yes, you're right. One plant got commissioned in the fourth quarter last financial year, that is February '19 or something. What we had said that 2 plants will get commissioned in next financial year, which is current financial year, '19/'20. And that's what I just, to the previous participant, I informed that one plant is getting commissioned in the next quarter and the second plant is getting commissioned in the fourth quarter. So these -- this is how these 2 plants are getting commissioned. And then we are also working currently on 2 more plants, that is in next financial year, which is '20/'21.

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Saurabh Jain, HSBC, Research Division - Analyst [80]

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Okay. And what are the timelines for those 2 plants?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [81]

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Well, generally it takes anywhere between 14 to 18 months for a new plant from rate 0 to the commissioning.

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Saurabh Jain, HSBC, Research Division - Analyst [82]

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Yes. So more likely in the second half of FY '21?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [83]

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Yes, yes, yes.

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Saurabh Jain, HSBC, Research Division - Analyst [84]

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Okay. And is there any other plant besides these? Because I suppose one more plant was supposed to commission in the Q2 FY '20. Is that right?

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Subhash Chnad Anand, PI Industries Limited - CFO [85]

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That's what Rajnish says. One plant will come up in Q2 FY '20, which is [the second] quarter. One plant we're expecting to be commissioned in Q4 this year. And then we are working on 2 more plants, which will be commissioning in FY '21.

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Saurabh Jain, HSBC, Research Division - Analyst [86]

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Okay. Got it. Got it. And this Q2 plant, a large part of that would be going towards -- would be for the purposes of backward integration or all incremental revenues?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [87]

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Yes. So it's a mix of it. I mean, some backward integration, and this is basically a new technology block. So this will also help us develop new business.

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Saurabh Jain, HSBC, Research Division - Analyst [88]

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Yes. So I just wanted to understand what -- if you can -- if you're comfortable sharing what would be the share of this plant going towards incremental revenues and how will it shape up?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [89]

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That much detail, I think, won't be there also immediately available with us, but we can discuss this on sideline.

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Saurabh Jain, HSBC, Research Division - Analyst [90]

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Sure. Sure, no problem. And just one more question. Again on the margin side, correct me if I'm wrong, on the CSM business, is it fair to say that we make higher gross margins and higher EBITDA margins, vis-à-vis, the domestic portfolio, in general? So just wondering, in Q2 we had a much higher share of the CSM business, but still, on the gross margins, we are seeing compression. So I understand that some bit of that is attributable to raw materials. But just wanted your thoughts on that.

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [91]

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Well, generally, it is all depending on the product mix. But in general, yes. The manufacturing export business or the area has a higher EBITDA margin. But then if you look at it in terms of assets, this business also requires more investment. So in that sense, one business generates higher EBITDA margin, the other business generates more cash on investments. So that's how we balance these 2 areas.

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Saurabh Jain, HSBC, Research Division - Analyst [92]

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Yes, so I just wanted to know, despite higher share of CSM business in this quarter, still the gross margins are lower on a Y-o-Y basis.

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [93]

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Well, 2 reasons: One is product mix; and secondly, we also started a new product. So it always happens that when we have started a new product, it takes a little time to kind of streamline and establish the right yields and costs and all.

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Subhash Chnad Anand, PI Industries Limited - CFO [94]

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So we have -- actually, we do have a higher ramp-up cost because of the new facility which we have started in Q4. That has had an impact on gross margin number in this quarter. And also what Rajneesh says, the product mix also has an impact on overall gross margin.

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Saurabh Jain, HSBC, Research Division - Analyst [95]

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Yes. Okay. I thought the ramp-up cost would more hit your EBITDA...

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Subhash Chnad Anand, PI Industries Limited - CFO [96]

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No. It's not EBITDA because yield, you're still working to set up your norms, so you always have a higher using in the beginning.

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Saurabh Jain, HSBC, Research Division - Analyst [97]

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Okay. Got it, got it. Just one last question. What could be the quarterly run rate for the depreciation and finance costs in broad sense, is it going to further increase from these quarterly numbers?

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Subhash Chnad Anand, PI Industries Limited - CFO [98]

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This quarter, finance cost broadly should be this line. But depreciation will go up as per our capitalization plan.

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Saurabh Jain, HSBC, Research Division - Analyst [99]

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Okay. So any sense on that? What kind of run rate we should assume?

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Subhash Chnad Anand, PI Industries Limited - CFO [100]

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So we spoke about this here. We will be spending around INR 400 crores CapEx. We have done almost INR 130 crores already. So rest will come in the next 3 quarters.

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Operator [101]

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(Operator Instructions) We'll take the next question from the line of Nihal Jham from Edelweiss.

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Nihal Mahesh Jham, Edelweiss Securities Ltd., Research Division - Research Analyst [102]

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So my first question was on the CSM bit. So the strong growth that we've seen, just wanted to understand that has there been a very big contribution from the sale of products that we've launched in the last 1 year, the new launches? Just if you could bifurcate what has been the incremental contribution of those products?

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [103]

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In fact, it's not one year which makes difference in our business, especially CSM business. Because first few year actually is a ramp-up. So 1 or 2 year is not the right way of looking at share of business, how much it came from 1 year from launches or 2 years. The way we look, at least we look 3 to 5 year kind of a launch and then try to see how are they contributing to business.

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Nihal Mahesh Jham, Edelweiss Securities Ltd., Research Division - Research Analyst [104]

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So when the other participant was asking about the increase in CSM share, which is I think been the highest in Q1 over the last many quarters. So where has the product mix change come? Because then if I understand, for the CSM portfolio, you were saying that our product portfolio would have more or less remained the same.

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [105]

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No. So frankly, we are not clear about your question but let me try and answer this other way. But as I explained earlier, that this quarter, this growth is looking steep because last year same quarter, it was almost flat. And then you would have also seen that quarter 2, 3, 4, the last year, we ramped up revenues from where we say 400 odd crore to the last quarter was almost INR 600 crores, fourth quarter of last year. So this year first quarter, 60% or 59% growth is looking quite steep because of that base factor. But going forward, as we had already ramped up the previous quarter revenues, this may not look steep. And where does revenues coming from? So again as we explained earlier, both the factor, existing commercialized product there is spread in volumes and several country because what happened that even existing product, they keep on getting registered in new markets, which means new markets are coming there. And even in the existing market, the volumes are growing. And these are all as you know early-stage molecules. These are not mature products. So this growth trend will always be there even for existing products. So the major share of the growth in our revenue is coming from there. Besides, we had also introduced I think, 3 or 4 products last year. So they have also contributed this year in the first quarter revenue and last quarter, we also started a new plant. So all these factors have contributed to this growth. I hope this answers your question.

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Nihal Mahesh Jham, Edelweiss Securities Ltd., Research Division - Research Analyst [106]

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Yes, it does, sir. So just one last question. How's the performance of Nominee Gold been this season?

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [107]

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Okay. Yes, when we look at Nominee Gold, obviously it's a bit too early to comment but Nominee, it's going as expectation. And I think as you know very well from the past, the consumption of Nominee has continued dependent about how the monsoon and the weather conditions favor. But overall as a brand, Nominee has its dominant position in the marketplace with more than 40 odd brands and continues to do that. And the company keeps to strategically place itself in the right market with the right price to ensure it continues to maintain its share.

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Nihal Mahesh Jham, Edelweiss Securities Ltd., Research Division - Research Analyst [108]

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Right. And has there been any pricing change compared to last season which is worth highlighting?

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [109]

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Yes, there is pricing plus/minus but this is too early to comment for competitive intelligence in the [public] right now.

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Operator [110]

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The next question is from the line of Sumant Kumar of Motilal Oswal.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [111]

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So the CSM growth guidance, you have given 25% so far. Assuming 24% growth guidance on an overall basis, the domestic business would grow by 10%. So where -- which product is diluted or is likely to drive the domestic growth?

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [112]

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(inaudible)

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [113]

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When we say that we are expecting to achieve 20% kind of growth, for the overall, for FY '20 we are saying. So in this, there is contribution of obviously, exports. The kind of pace that we are going. And for domestic, it's not specific to 1 product. There are several products that we have launched in last couple of years. And general improvement in the second half or later part of the Kharif will help us kind of ramp up volumes of these newly launched 5, 6 products in last 2 years that we have launched. That should help us kind of drive the growth.

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [114]

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And some of the products which we launch this year and planning to launch this year also will help us to overall domestic volume increase.

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [115]

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Will contribute.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [116]

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So you are including the herbicide, which herbicide also in the 10% of the growth?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [117]

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Yes, that will also contribute.

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [118]

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It's part of the plan.

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [119]

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It cannot be a significant value. But yes, it will certainly be part of this overall plan.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [120]

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Okay. Any ForEx gain in this quarter?

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Subhash Chnad Anand, PI Industries Limited - CFO [121]

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ForEx gain? As we say, in our business ForEx gain is actually everything that's passed on. So net-net, it's not right to look separately at ForEx gain in the overall number.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [122]

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Okay. So in -- ForEx gain is in the other expense or in revenue, it is there or not?

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Subhash Chnad Anand, PI Industries Limited - CFO [123]

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It's part of that. Something is part of revenue as per standard because it gets accounted as per the revenue thing. And something goes as a part of other income, other expense. So it's always how you split historically anyone in this quarter also.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [124]

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Okay. So it's not material?

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Subhash Chnad Anand, PI Industries Limited - CFO [125]

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No, it's not.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [126]

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Okay, okay. And tax guidance for the FY '20, '21?

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Subhash Chnad Anand, PI Industries Limited - CFO [127]

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We are maintaining 23.5% this year, similar to what we had last year.

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Operator [128]

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The next question is from the line of [Amar Mourya] from AlfAccurate Advisors.

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Unidentified Analyst, [129]

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Congratulations for a very good set of numbers. My question is, wanted to understand like what -- are we seeing a significant demand improvement for our kind of product? Because what I can sense here is that the kind of momentum that we are seeing from last 3, 4 quarters is not only driven by the new product line but also the existing product has seen a significant demand improvement. So what is leading to this kind of demand improvement? This is my first question. And secondly, sir on the CapEx side the INR 450 crores CapEx which we had announced. I mean this whole CapEx will be deployed under the hedge sterling unit or this will be also going for the Rajasthan plant? And then I have 1 more follow-up, sir.

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [130]

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Yes. So in terms of -- I mean, for your first question, the growth is driven by both existing and new product and why existing products are growing so much, I just responded to the earlier participants. All these products, even existing products, are all these products are early-stage molecules. So it's a very natural trend that one product when it is launched, it is launched in say, a couple of countries and then gradually it is launched in several other countries year-on-year. So in the following year, not only in the country where it's already registered there it will grow but, the growth will also come from the new countries. And that is precisely the reason that some of these existing products that we are doing, which are also listed molecules, they are growing continuously year-on-year. And it is very much kind of part of plan and anticipated when we get into long-term investment for global innovators. Your second question on CapEx. Yes, the major investment, although will be there in our SEZ plant but yes there are other maintenance CapEx and there is also some CapEx, R&D which is happening in Jaipur. So if it's -- complete CapEx for the company. But yes, the major part of this would be for capacity enhancement in the SEZ.

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Rajesh Kothari, AlfAccurate Advisors Pvt. Ltd - Founder, MD & Director [131]

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Okay, and given that now the volume content which we are seeing the increase, I mean, the -- won't we see that all the CapEx which we are doing is largely for a new product or a growth kind of a CapEx? Should we not have to do some brownfield CapEx also because the kind of momentum which we are seeing in the existing line of product? Or we are [esteemed with] those kind of facilities?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [132]

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No. What do you mean by brownfield? I mean..

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Rajesh Kothari, AlfAccurate Advisors Pvt. Ltd - Founder, MD & Director [133]

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I'm saying that since now we are seeing the -- even the existing product line are also seeing a volume growth. I mean, are we going to do some brownfield CapEx in both the plants or because largely this INR 450 crores is for the 2 new plant right? And this is new product only?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [134]

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Yes. So generally in our common parlance, the new plant in existing site is brownfield only. As far as increased meeting requirement of increased volume of existing products and plants, it is basically by debottlenecking existing plants and the capacities and all. So it is mix of this CapEx when we say new plant as well as some balancing equipment and improvisation in the existing plants. So all this is there in that term. Around INR 400 crores when we say.

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Rajesh Kothari, AlfAccurate Advisors Pvt. Ltd - Founder, MD & Director [135]

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Okay, so it will be mix of like -- if we can just quantify INR 450 crores out of that, how much would be for the balancing and how much would be for the actual new product?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [136]

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That break up we may not be having right here. But yes, I mean, the effect includes both type of...

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Operator [137]

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The next question is from the line of Bharat Shah from ASK Investment Managers.

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Bharat Shah, ASK Investment Managers Limited - Executive Director [138]

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One question. Given the strength of our chemistry, given the strength of our client relationship and given also the fact that we have got in at the deeper end of the R&D pipeline and the order book that we hold, what kind of, let's say, 3 to 5 minimum growth we should expect and look forward to in our international business?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [139]

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Well, we have -- while we have maintained that given the current visibility, R&D pipeline, I mean, we are very hopeful of sustaining this 20% plus kind of growth rate.

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Bharat Shah, ASK Investment Managers Limited - Executive Director [140]

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For 3 to 5 years?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [141]

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Yes.

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [142]

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Correct.

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Bharat Shah, ASK Investment Managers Limited - Executive Director [143]

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Okay. And secondly, at what stage will we delight not just customers but India by coming up with breakthrough technology by original chemistry molecules?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [144]

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R&D is never predictable because we would have been sitting somewhere else. R&D is never predictable.

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Bharat Shah, ASK Investment Managers Limited - Executive Director [145]

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How about when we do enough of it over a period of time, something should become predictable. If that result is not achieved, then I think we would have ended it.

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [146]

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Yes, but we are basically working a lot on the process technology area. Somewhere in the nascent stages of development and as in the next couple of years, we'll have a better visibility of where this could play out. So that's where we are right now.

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Operator [147]

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And the next question is from the line of Nitin Agarwal from IDFC securities.

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Nitin Agarwal, IDFC Securities Limited, Research Division - Analyst [148]

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Sir, just quickly on the CRAM part of the business, the [customer end] part of the business, is there any -- what's your sense on over the next 3 to 5 years, what proportion of this business could be the non-agri chem part of the business for us? Or over the next -- this year at least in this horizon it still continue to be a predominantly agri chem driven business for us only?

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [149]

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Yes, if you look at it at predominately it would be AgChem, one we have aggressive growth rate there in the predominant side while we are focusing the other segments that the development side will continue to be between 3 to 4 years. So I do believe it will still remain in single digit in the first half and larger numbers in a span over the next 5 to 6, 7 years.

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Nitin Agarwal, IDFC Securities Limited, Research Division - Analyst [150]

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Single-digit the non-AgChem business despite all the growth -- I mean given the fact that the agri chem business is growing -- will keep growing faster and still remain, despite the progression of single-digit percentage of the overall CRAM business?

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [151]

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That's right.

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Operator [152]

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And the next question is from the line of (inaudible) from (inaudible) advisors.

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Unidentified Analyst, [153]

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Congratulations for a very solid set of results. I have 2 questions. The first question was that the 50 to 100 basis points improvement in margin that you spoke about, could you throw some color on what are the main factors that will drive it?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [154]

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Well, the main factor would be the operating leverage. The kind of growth that we are talking and we are able to achieve. We expect that should give us some operating leverage there. While yes, product mix is another aspect, but also there are other areas where we are investing. So I mean, broadly, if you look at it the only key driver would be the operating leverage.

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Unidentified Analyst, [155]

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The second question is a bit of a follow-up question from earlier questions. The 10% I get on the agri chem business globally is that after many years of FX growth it has -- the outlook has improved somewhat. Is this assessment correct? Or is this only true of the kind of molecules that you are operating in because you are in the more innovative end of the spectrum? Can you throw some color as to what is actually happening in the agri chem business recently and the outlook in the near future globally?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [156]

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Yes. So 2, 3 things -- hello? Yes. So 2, 3 things. One, that the global, if we are talking about the global perspective, overall compared to previous 3, 4 years, yes, there is some kind of improvement and majorly because a few markets had reasonably done well like Latin America and all last year. And inventory levels have come down. So this is the positive side. Not so positive side is that even this year and last season in many countries was not that great, including North America, Europe and Australia and all. And therefore, the results that we see today of these global companies, again a very mixed kind of scenario that some companies have done not so great but few companies have done very well, I mean more than double-digit kind of growth, okay? But ultimately -- so this is the global scenario and I mean, overall, as we hear from these global companies, they are relatively positive. What -- I mean, when I say relative, means what their outlook was, maybe 2 years back, 1.5 years back and what their outlook is today. There is a positive trend, a positive improvement. As far as for us, [PII] is concerned as I explained earlier, I mean it is entirely because of the product portfolio and the quality of product portfolio that we have, that these are all early-stage molecules and they are not getting affected by these vagaries and changes because these products are getting registered in new countries every year. There is a natural growth trend going there.

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Operator [157]

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The next question is from the line of Rishab Bothra from Sharekhan.

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Rishab Bothra, Sharekhan Limited, Research Division - Equity Research Analyst [158]

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I just wanted to understand of the total products in R&D pipeline, how many of them would be under the new business category which we are exploring? Let's say electronic chemicals or imaging chemicals, pharmaceutical? And if you can also provide CapEx guidance for FY '21. As you mentioned, 2 new plants will be coming up there.

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [159]

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Yes, close to I would say 10% of our pipeline projects are non-AgChem at this point and they are growing. And since the overall number is also increasing, so there's -- close to 10% is a good number. So this is one. Second question, can you please repeat your second question?

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Rishab Bothra, Sharekhan Limited, Research Division - Equity Research Analyst [160]

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You mentioned that 2 new plants will be coming up in FY '21 later half.

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [161]

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Yes.

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Rishab Bothra, Sharekhan Limited, Research Division - Equity Research Analyst [162]

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So what will be the CapEx guidance for that? You mentioned INR 400 crores to INR 450 crores for FY '20.

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [163]

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Yes, I mean, we are at -- this point we are estimating the same, almost close to INR 400 crores to INR 450 crores is what we are estimating first, FY '21 as well.

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Operator [164]

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The next question is from the line of Prashant Biyani from Prabhudas Lilladher.

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Prashant Biyani, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [165]

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Hello?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [166]

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Yes, please.

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Prashant Biyani, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [167]

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Subhash, even though direct exports we sell mostly in Asia, among other geographies, what will be the share of indirect exports? Can you just give some color on that?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [168]

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No, we are not clear what exactly you mean by direct export and indirect export.

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Prashant Biyani, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [169]

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By direct export I mean, we are directly exporting to clients globally. And indirect export would mean, our clients in turn selling it to other geographies. And if someone is selling from Asia to NAFTA or Europe, something like that.

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [170]

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No, no. We have direct relationship with these, all these global companies. So all our exports are mostly direct. There's hardly anything that's indirect. In fact there won't be any indirect export or something.

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Prashant Biyani, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [171]

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No, I mean, but say we are selling anything in for example, Japan.

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [172]

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Okay.

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Prashant Biyani, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [173]

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The finished product manufactured from those are consumed only in Japan? Or they might be -- might have been exporting to...

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [174]

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No, no, no. So yes, now I understand what you mean. So yes, most of these products -- so for example, we supply to these global companies, companies, multinational companies in say, for example, in Japan, and these global companies are selling those products globally, not only in Japan.

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Prashant Biyani, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [175]

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So that way only, any color which you would have on indirect export could be worth...

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [176]

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Well, that may not be.

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Subhash Chnad Anand, PI Industries Limited - CFO [177]

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We don't have visibility on that.

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [178]

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We won't have exact visibility that if we sell to x company in Japan, how much of that x volume goes to which region? That we do not have.

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Prashant Biyani, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [179]

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And much of incremental growth going forward or even the existing growth, are these coming from the existing clients or the new clients? Something on that?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [180]

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Well, significant part is coming from existing clients when we are going deeper with existing clients with the newer projects. But at the same time, as I said earlier, that the R&D pipeline is also growing. And therefore, a lot of new clients are also getting added. New customers are also getting added.

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Prashant Biyani, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [181]

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But can you give some client addition count, what could be this year until now and what was last year in FY '19?

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [182]

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We won't have this number readily. But yes, I mean, off the end, I can say that we would have added at least 4, 5 clients this year.

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Operator [183]

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We'll take that as the last question.

I would now like to hand the conference back to the management team for closing comments.

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Mayank Singhal, PI Industries Limited - Executive Vice-Chairman & MD [184]

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Thanks, everybody, for coming on the call today. I appreciate and look forward to meeting you all on the next quarter. Thanks again to the team.

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Rajnish Sarna, PI Industries Limited - Chief IR officer, President of IT & Finance & Whole-Time Director [185]

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Thank you, thank you, gentlemen, for your participation.

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Subhash Chnad Anand, PI Industries Limited - CFO [186]

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Thank you.

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Operator [187]

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Thank you very much. On behalf of PI Industries Limited, that concludes the conference.

Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.