Advanced Enzyme Technologies Ltd (NSE:ADVENZYMES) Q3 FY23 Earnings Concall dated Feb. 14, 2023.
Corporate Participants:
Ronak Saraf — Investor Relations
Mukund Kabra — Whole-time Director
Beni Prasad Rauka — Chief Financial Officer
Analysts:
Shikha Mehta — Equitree Capital — Analyst
Rohit Sinha — Sunidhi Securities — Analyst
Unidentified Participant — — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Advanced Enzyme Technologies Limited Q3 FY ’23 Earnings Conference Call. [Operator Instructions]
I now hand the conference over to Mr. Ronak Saraf from Advanced Enzyme. Thank you, and over to you, sir.
Ronak Saraf — Investor Relations
Good evening, everyone. Welcome to Advanced Enzyme’s Q3 and nine months FY ’23 earnings conference call. I am Ronak Saraf, the Manager, Investor Relations here at Advanced Enzyme. We hope you all have gone through our financial press release and the presentation, which has been posted in the Investor Relations sections of our website.
We have with us Mr. Mukund Kabra, Whole-Time Director; Mr. Beni Prasad Rauka, Group CFO. Today, the management will discuss the performance and business highlights, updates on strategies and respond to any questions that you may have. As usual, for ease of discussion, we will look at the consolidated financials.
Before we proceed, I would like to draw your attention to the forward-looking statement contained in the PPT. During our call, we may make forward-looking statements regarding our expectations or the predictions about the future. Because these statements are based on current assumptions and factors that may involve risk and uncertainty. Our actual performance and results may differ materially from our forward-looking statements.
With this, so without any further ado, we shall commence this call. Over to you, Mukund, sir.
Mukund Kabra — Whole-time Director
Thank you, Ronak. Good evening, everyone. I really appreciate you all for taking out your valuable time, and I welcome you all to the conference call for the quarter and nine months ended 31st December 2022, starting with a quick brief on global conditions, disruption continues in the business environment. Global economic scenario continues to remain uncertain with skews of decision to reverting in layoff and inflation remains elevated leading to sluggish convention on the geopolitical, political prices remain equivalent. On the positive side, the raw material surge has started easing and so do the trade cost, we sincerely hope this prices gets stable in the coming quarters.
Despite all the uncertainties, our quarter three financial figures demonstrated an improved top line growth although our operating costs remain elevated, which impacted our profit margin. The growth in the quarter three numbers are driven by animal nutrition and bioprocessing service. Now as far as the quarterly performance, our top line stood at INR1,421 million, grew 2% on a sequential basis. And on a yearly basis, we have grown about 6% in quarter three. On year-to-date, nine months stood at INR4,019 million, that is just 1% growth.
Our EBITDA stood at INR417 million, grew 5% on a sequential basis, while it is declined by about 15% on a year-on-year basis and 30% in nine months. We have experienced a growth of 6% in the bottom line on a sequential basis, while it declined 2% on year-on-year basis and 27% in nine months. On the margin side, EBITDA margin stood at 29% and PAT margin stood at 20% during this quarter number three. Our overall margins remain subdued on a year-on-year basis on account of elevated operating costs.
Talking about the segment-wise performance, human nutritions. The Human Nutrition segment remains highest contributor, as usual, it is at 66% of the total revenue. It grew by 2% on an annual basis, while it declined by 1% on sequential basis. On nine-month year-to-date comparisons, it declined by 2%. Pharma, API and biocatalysts in domestic markets and provided in international markets primarily supported the numbers in human nutrition. There is softness in the nutrition business as an impact of inflation which remains subdued.
Animal Nutrition, the Animal Nutrition segment contributed 12% to the revenue. This segment is continuously improving from almost from few quarters, it grew by 33% on a year-on-year basis, 2% on a sequential basis and 23% on a nine-month year-to-date basis. Bio-processing, during the quarter, Bio-processing segment sucrose contribution of Animal Nutrition segment and contributed 15% to the revenue, which was 12% in the same quarter last year. It grew by 41% on the year basis and 17% on sequential basis, both food and non-food business grew by 38% and 49% respectively, on a year-on-year basis.
The specialized manufacturing segment contributed 6% and grew by 4% on sequential basis, while a negative 31% and 34% on a year-on-year basis and on nine-month year-to-date basis respectively.
With this, I will now hand over the call to Mr. Beni Prasad Rauka, who will walk you through the financial and key subsidiaries numbers. Over to Beni.
Beni Prasad Rauka — Chief Financial Officer
Thank you very much, Mukund. Good evening, everyone. I hope you all are in good health. On the company’s financial for the third quarter of 2023, on a quarter-on-quarter basis, Q3 versus Q2, the revenue has increased by INR34 million, a 2% increase from INR1,387 million to INR1,421 million. Our EBITDA has increased by INR20 million [Phonetic] about 5% from INR397 million to INR417 million, which is about 29% of our revenue. Profit before taxes increased by INR62 million from INR342 million, this is 25% of revenue to INR404 million, 28% of revenue.
Our PAT has increased by INR16 million, an increase of 6% from INR263 million to INR279 million, 20% of the revenues. On year-on-year basis, Q3 of current financial year versus Q3 of last year, our revenue has increased by INR85 million from INR1,336 million to INR1,421 million. EBITDA, however, has decreased by about INR74 million from INR491 million to INR417 million and profit before taxes decreased by INR8 million from INR412 million to INR404 million, 28% of our revenue from 31%.
PAT has decreased by INR7 million from INR286 million, 21% of revenue to INR279 million, which is about 20% of our revenue. Let me give nine months number. So our revenue has increased by INR43 million, an increase of about 1% from INR3,976 million to INR4,019 million. EBITDA is decreased by INR488 million from INR1,611 million to INR1,123 million. So EBITDA margin decreased from 41% to 28% in nine months of current financial year.
Our profit before taxes decreased from INR1,371 million to INR983 million, which is roughly 25% of our revenue as compared to 34% of last year. PAT is decreased by INR267 million from INR985 million to INR718 million, about 18% as compared to 25% of PAT.
Let me give you some financial number of our subsidiary company. So Evoxx has performed, I mean, very well in this quarter, it’s EBITDA positive from INR4 million to INR17 million in this quarter and the top line has increased from INR48 million to INR55 million. For nine months, Evoxx top line is INR182 million as compared to INR160 million of last year and EBITDA of INR39 million as compared to INR11 million last year. And for nine months, Evoxx has reported a profit after tax of INR10 million as compared to negative — I mean, loss of INR22 million during nine months of last year. JCB has reported EBITDA negative during this quarter as compared to EBITDA of INR14 million positive to negative INR17 million. And the PAT is about INR20 million negative as compared to INR5 million positive during last quarter.
So overall, for nine months, JCB has also reported increase in sales from INR355 million to INR394 million. But this year, is negative INR8 million as compared to INR55 million of PAT during last year nine months. SciTech has reported INR86 million of revenue as compared to INR84 million during last quarter. And for nine months, SciTech has reported total INR236 million of revenue as compared to INR360 million in nine months of last year and High-Tech is also EBITDA negative of INR30 million as compared to INR78 million last year.
Accordingly, the PAT is also negative INR51 million as compared to INR35 million of net profit in last year nine months. Our highest — largest product, this is anti-inflammatory enzyme. The sales stood at about INR333 million as compared to INR279 million in quarter three of last year. And for nine months, the total sales of anti-inflammatory enzyme is INR963 million as compared to INR792 million during last year nine months and it has posted an increase of about 22% and it constitutes 22% of sales as compared to 24% last year.
Top 10 customers contributes on YTD basis about 26% as compared to 28% last year. And our B2C segment has contributed about INR1.6 million of sales in this quarter as compared to INR1.55 million during the same period previous year. Overall, B2C sales for nine months is INR3.63 million as compared to INR4.31 million, so a steady growth of about 15%.
Human Health care, we give a breakup of our sales, international sales, domestic sales. So quarter three, India sale was about INR393 million as compared to INR440 million in the last quarter. And in the previous quarter — I mean, in the third quarter of previous year, INR382 million. International sales line at INR541 million as compared to INR499 million in the previous quarter. And the relevant previous quarter of the — relevant quarter of the previous year INR536 million. So overall, the sale has gone up from INR918 million in quarter three of last year to INR934 million in quarter three of current financial year. But yes, as compared to the previous quarter, it’s down by INR5 million.
Our R&D expenses has gone up. And for nine months, the R&D expenditure is about INR211 million as compared to INR146 million during the nine months of the last year.
So this was from my side. Now we can open the floor for question-and-answer session.
Questions and Answers:
Operator
[Operator Instructions] The first question is from the line of Shikha Mehta from Equitree Capital. Please go ahead.
Shikha Mehta — Equitree Capital — Analyst
Hello, sir. I just have a few questions. One is to understand when we’ll be able to go back to a historical EBITDA margins or what guidance we have on that front when our margins will normalize to 40%?
Mukund Kabra — Whole-time Director
So notice, Shikha, there is some recessionary pressure in the U.S. market and the U.S. market sales are down. U.S. market contributes to the higher EBITDA and higher margins. We have launched a couple of good products during this quarter. And I expect the new products should give the sales after another four, five months. So I think that will be the time when we will come back to our original trajectory.
Shikha Mehta — Equitree Capital — Analyst
So over the next, say, two quarters, we should see our margins come back to 40%, north of 40%? That’s what —
Mukund Kabra — Whole-time Director
Yes.
Shikha Mehta — Equitree Capital — Analyst
And sir, another thing on the animal nutrition side, we were witnessing swine flu and all these other problems. But this quarter, we’ve seen a sequential improvement. So can we assume that’s been addressed and going forward, this segment should do well?
Mukund Kabra — Whole-time Director
So, a lot of focus is there on the animal nutrition market. The major growth is coming from the Asian market at this point of time. We expect this growth to continue in the coming year as well. And this year also like we should do a decent growth.
Shikha Mehta — Equitree Capital — Analyst
All right, sir. All right. I’ll come back in the queue.
Mukund Kabra — Whole-time Director
Thank you.
Operator
Thank you. [Operator Instructions] Next question is from the line of Rohit Sinha from Sunidhi Securities. Please go ahead.
Rohit Sinha — Sunidhi Securities — Analyst
Hi. Thank you for taking my question. Sir, with all these global — I mean, geopolitical things going across, how we are seeing our Evoxx and mainly Evoxx performance going forward? And overall, with all the logistic costs, freight costs are reducing, so are these going to benefit on our side on the margin front?
Mukund Kabra — Whole-time Director
So Evoxx, [Indecipherable] it will be more or less the constant because it’s doing more on the R&D front rather than the real [Indecipherable] generation. So I expect Evoxx to be more or less neutral and the remaining — and it will be rather positive. This cost when it goes down, of course, it helps on the margin, but our major margins will come for the U.S. market. As the U.S. market size a bit, we will come back — as I was telling to Shikha, we will come back to our original trajectory.
Rohit Sinha — Sunidhi Securities — Analyst
Okay. Okay. And if I heard correctly, in JC Biotech, I think, has reported a loss in this quarter. So is it because of, I mean, cost pressure only? Or has there been a lower realization or lower volumes as well?
Mukund Kabra — Whole-time Director
So it’s mainly due to the cost problems and there were like a couple of issues, which we addressed this quarter. They will be due to on a higher side on the maintenance cost as well in this quarter. That should come back to the normalcy by the next quarter.
Rohit Sinha — Sunidhi Securities — Analyst
Okay. Okay. And any guidance we can give for FY ’24 in terms of top line and EBITDA growth?
Mukund Kabra — Whole-time Director
Rohit, we are not right now worked on that. But I feel like next year should be much better than this year.
Rohit Sinha — Sunidhi Securities — Analyst
Okay. That’s it from my side. Thank you.
Mukund Kabra — Whole-time Director
Thank you.
Operator
Thank you. [Operator Instructions] Next question is from the line of Sarvesh Saini [Phonetic] individual investor. Please go ahead.
Unidentified Participant — — Analyst
Good evening. I have a question regarding competition. Has the competition building up right now?
Mukund Kabra — Whole-time Director
Good evening, Sarvesh. We do have competitions in different, different segments. There were different, different competitors. If you can elaborate more, I can give more light, which area you’re talking about?
Unidentified Participant — — Analyst
On the animal health care side and human, both.
Mukund Kabra — Whole-time Director
So animal side, it’s the same competition, which is there, right? It’s like you were talking from a long term like we wanted to penetrate the market with all the registrations and some other things and we are working on that from a long time. So that is — we’re working in some kind of results right now and that is where the growth is coming from the animal side rather than the competition. Even in the human side, the competition is more or less same. And major typical competition is more intense at this point of time, particularly in the U.S. because when there is a recession, the competition will become more active.
Unidentified Participant — — Analyst
Okay. So margins have not been impacted because of the competition, right?
Mukund Kabra — Whole-time Director
It’s never been because of the competition.
Unidentified Participant — — Analyst
Okay. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Rohit Sinha from Sunidhi Securities. Please go ahead.
Rohit Sinha — Sunidhi Securities — Analyst
Yes. Sir, just wanted some clarity on this merger of the subsidiary, U.S. subsidiary into one entity. So what’s the rationale behind that? And what would be the — or would there be any kind of tax benefit or tax change — tax rate change would be there?
Beni Prasad Rauka — Chief Financial Officer
So, Rohit, this — the company which we have merged is in the similar business. I mean, the products were same. Only the distribution model was different. So keeping two entities were causing a lot of administrative issues and the compliance issues. So that is only the reason we have merged, but there’s no as such impact on directly in terms of tax benefit and all that. So it’s like definitely, there will be some kind of reduction in expenses, but that’s not substantial because that is a very small company.
Rohit Sinha — Sunidhi Securities — Analyst
Okay. Okay. And secondly, what would be the working capital days for us for this quarter? And how we are looking at for the year-end FY ’23?
Beni Prasad Rauka — Chief Financial Officer
Yes. So working capital in terms of number of days of our sales continues to be in the range of about 110 to 120 days or so.
Rohit Sinha — Sunidhi Securities — Analyst
Okay. Any possibility of improvement there?
Beni Prasad Rauka — Chief Financial Officer
Well, I mean, I don’t see immediate impact — any kind of improvement in the sales because the issue is you have so many plants and so many companies. So you need to maintain different kind of inventory of raw materials, finished goods, concentrate materials. So I think this will keep on — it will continue to be in the range of about 110 days to 125 days or so.
Rohit Sinha — Sunidhi Securities — Analyst
Okay. Okay. And 1 last thing on capex side. And our earlier announcement on that R&D facility. So what is the capex number for FY ’23 and at least for nine months, what we have did till now?
Beni Prasad Rauka — Chief Financial Officer
Yes. So we have spent — I mean other than lands, acquisition and cost related to land, we have spent about INR30 million so far.
Rohit Sinha — Sunidhi Securities — Analyst
Okay. INR30 million is for nine months?
Beni Prasad Rauka — Chief Financial Officer
Right.
Rohit Sinha — Sunidhi Securities — Analyst
And for — I mean, full year ’23, what number we will be ending?
Beni Prasad Rauka — Chief Financial Officer
I think another INR3 million — INR30 million will be spent in a couple of months.
Rohit Sinha — Sunidhi Securities — Analyst
So all these is towards that R&D facility or any other?
Beni Prasad Rauka — Chief Financial Officer
R&D. Yes, it’s only on R&D facility.
Rohit Sinha — Sunidhi Securities — Analyst
Okay, okay. That’s it from my side. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Ketan Saraf [Phonetic], individual investor.
Unidentified Participant — — Analyst
Hi. Thank you for the opportunity. My question is on bio-catalysis products. In the investor presentation, it is mentioned that we have this as a focus area. And I see that in FY ’22, we are mentioning that we’ve done a revenue of $2.5 million. So could you throw some light on this segment, please?
Beni Prasad Rauka — Chief Financial Officer
Ketan, what do you want to know exactly?
Unidentified Participant — — Analyst
So what I want to know is like how many products are under trial and with how many manufacturers are we doing these trials right now? And by when do we expect any commercialization from this product category?
Mukund Kabra — Whole-time Director
So there is about five to six products which are under trial at this point of time that the customer is — some of them are just [Indecipherable]. I think these all the products will be revenue positive, maybe one or two quarters down the line, we should grow much faster.
Unidentified Participant — — Analyst
You’re saying that in the next six-odd months, we should get some commercial sales, some revenues from these products?
Mukund Kabra — Whole-time Director
We started to see all the commercial sales right now, but the investment [Indecipherable].
Unidentified Participant — — Analyst
Sorry. Could you say that again? I’m not able to hear you clearly, volume dropped.
Mukund Kabra — Whole-time Director
We started taking 1 or 2 products, commercial orders from this quarter, but the volume tilt-up will require some more time. And there are a lot of — three, four products are under trail. So overall, it will take two quarters.
Unidentified Participant — — Analyst
Okay. And how many API manufacturers are we in touch with for these product categories?
Mukund Kabra — Whole-time Director
It depends on the different, different APIs we are approaching those people. So I don’t have numbers right now in my mind.
Unidentified Participant — — Analyst
Okay, okay. Yeah. Thank you. That’s all from my side. Thanks.
Operator
[Operator Instructions] As there are no further questions, I now hand the conference over to Mr. Ronak Saraf for closing comments.
Ronak Saraf — Investor Relations
Thank you, everyone, for taking your valuable time for attending our earnings conference call. We will keep you posted for any further updates. I request you all to kindly send in your questions that may remain unanswered. An audio recording and the transcript of this call will be uploaded on our website in due course. Looking forward to host you all in the next quarter. Till then, stay healthy, stay safe.
Mukund Kabra — Whole-time Director
Thank you.
Beni Prasad Rauka — Chief Financial Officer
Thank you, everyone. Bye-bye.
Operator
[Operator Closing Remarks]