Anupam Rasayan India Ltd (ANURAS) Q3 FY23 Earnings Concall Transcript

Anupam Rasayan India Ltd (NSE: ANURAS) Q3 FY23 Earnings Concall dated Jan. 27, 2023

Corporate Participants:

Rahul Thakur — Investor Relations

Kiran Patel — Chairman

Anand Desai — Managing Director

Amit Khurana — Chief Financial Officer

Vishal Thakkar — Deputy Chief Financial Officer

Analysts:

S Ramesh — Nirmal Bang Securities Private Limited — Analyst

Ankur Periwal — Axis Capital — Analyst

Saurabh Kapadia — Sundaram Mutual Fund — Analyst

Rohit Nagraj — Centrum Broking — Analyst

Vidit Shah — IIFL Securities — Analyst

Siddharth Gadekar — Equirus — Analyst

Ratish Varier — Sundaram Mutual Fund — Analyst

Pankaj Prabhakar Bobade — Affluent Assets — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Q3 FY ’23 Earnings Conference Call of Anupam Rasayan India Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Rahul Thakur. Thank you and over to you, sir.

Rahul Thakur — Investor Relations

Thank you, Ritija. Hello, and good evening, everyone. I’m pleased to welcome you all to Anupam Rasayan’s earnings call to discuss Q3 FY ’23 results.

Please note, a copy of all our disclosures are available on the Investors section of our website as well as on the stock exchanges. Anything said on this call, which reflects our outlook for the future or which could be construed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces.

Today, from the management side, we have with us Dr. Kiran Patel, Chairman; Mr. Anand Desai, Managing Director; Mr. Amit Khurana, CFO; Mr. Vishal Thakkar, Deputy CFO.

Now I hand over the call to Dr. Kiran Patel for his opening remarks. Over to you, sir.

Kiran Patel — Chairman

Thank you, and welcome, everyone, to the Q3 FY ’23 earnings call. Wishing you all a happy, healthy and a prosperous new year. As we step into 2023, the macroeconomic environment remains fairly uncertain with clouds of recession, threatening the global market. There is also hope and some delight for a path to a soft…

Operator

Ladies and gentlemen, sorry to interrupt, the line of the management got disconnected. Ladies and gentlemen, thank you for patiently holding the line. The management line is reconnected. Thank you, and over to you, sir. Mr. Patel, you may please proceed.

Kiran Patel — Chairman

So my apologies for the communication challenges. As I was mentioning, the economy is in turbulence and the elevated inflation, continued war in Ukraine, coupled with the high risk for leading economies entering to recession. Add to these, the COVID situation in China. All of these factors make the overall economic…

Operator

Ladies and gentlemen, the line of Dr. Kiran Patel got disconnected. Please stay connected while we reconnect. Ladies and gentlemen, thank you for patiently holding. The line of Dr. Patel is connected. Thank you, and over to you, sir.

Kiran Patel — Chairman

Hello? Do you hear me now?

Operator

Mr. Patel, please proceed. Your line is unmuted.

Kiran Patel — Chairman

Okay. Please accept my apologies, but I’ll continue. Despite the global challenges, I’m very pleased to report that Anupam’s product portfolio is performing really well. We have positioned our portfolio…

Operator

Participants, may we request you to please stay connected while we reconnect to Dr. Patel. Ladies and gentlemen, thank you for the patience, the line of Dr. Patel is reconnected. Thank you, and over to you, sir.

Kiran Patel — Chairman

Okay. Anand, if I got disconnected one more time, I will let you take over. But I wanted to remain — let our audience know that Anupam customer base…

Operator

I now request Mr. Anand Desai to please take over.

Anand Desai — Managing Director

Yes, thank you, Dr. Patel and sorry and apologies to the audience for Dr. Patel’s problems in his communication. We get that. Hello, and good evening, everyone. Welcome to our Q3 FY ’23 earnings call. I would like to wish you a very happy new year and I hope that the new calendar year brings with it better opportunities for all of us.

Before I discuss the business performance for the quarter, I would like to highlight that after the fire at our Unit 6 in Sachin, we have been able to get relocation of the closure orders and approval to restart the plant from the regulatory operator. Now coming to business updates. During the quarter, our growth was lower-than-usual primarily due to higher down of one of our plants. If you adjust for the same, that our growth would have been around 22% during the quarter. Since the plant has restarted, I’m confident that we’ll be get robust growth in our sales for FY ’23. However, Amit bhai, Vishal bhai take you through — financials details in their opening remarks.

As it continues to grow and consolidate our position, expansion of our management bandwidth would be a key to this process. I’m glad to inform you that we continue to expand our business — team and we have added 11 people with huge experience in the past, but we are working in different MNCs across our key geographies and target companies. We continue to build a strong business with our existing customers by gaining wallet share and with the new team in-place, I’m confident that this will help us serve our customers both existing and new, in a much better way and further expand the client base. Our total products tally has now reached 250, with commercialization of one more product under LOI during the quarter.

Till now, we have commercialized total of four core products under the LOI and contracts and we will commercialize the products in the coming quarters. Now coming to the pipelines of the products. We have a strong pipeline of products to be commercialized in Q4. We have the planning to launch five products in Q4 and majority of them will be the fluorination chemistry. Before I conclude, I wanted to highlight the customer interactions have been very encouraging.

We have specifically seen strong interest from various customers on the fluorination side. We continue to work with the customers, and I expect more conclusion of LOIs for new products and commercial of LOIs into contracts in these coming quarters. This would further increase our revenue, — including for the coming years. Finally, to conclude, we see strong growth in coming quarters and years on the back of a robust pipeline of products to be launched. These are plan at Unit 6, for the quarter and expansion in capacity to cater to demand.

With that, I would to hand over the floor to our CFO. Over to you, Amit bhai.

Amit Khurana — Chief Financial Officer

Well, thank you, Anand sir. Good evening, everyone.

As Anand sir mentioned, our capex is going on as per plan. In last nine months, we have invested over INR100 crores in various capex projects including brownfield expansions, R&D facility and solar project. We expect this brownfield expansion projects to be completed as per the plan scheduled. This will provide enough capacity for the growth the next three to four years. On the working capital side during the quarter, we generated cash-flow from operations of around INR57 crores. This is higher than the PAT for the quarter. We have been highlighting that we will be in a good position to generate strong cash-flow, as we bring down our working capital requirements. Therefore, I remain confident that we will generate strong cash-flow from operations in the coming financial year.

With this, I hand over the floor to our Deputy CFO, Vishal bhai, who will take you through the financials.

Vishal Thakkar — Deputy Chief Financial Officer

Thank you, Amit bhai. Hello and happy New Year to everyone. Thank you for joining us here today.

I would like to briefly touch upon the key performance highlights for the quarter and nine months ended 31st December 2022, and then we’ll open the floor for question-and-answers. Before I proceed, I hope you all have had a chance to go through the detailed presentation, submitted to the exchanges and uploaded on our website. Kindly note, our numbers for the quarter and nine months are consolidated basis — on consolidated basis also include Tanfac numbers. I will first start the standalone financials for the quarter ended December 31, 22.

Despite unavailability of one of our plants, our operating revenue for Q3 FY ’23 was at INR2,862 million as compared to INR2,662 million, in Q3 FY ’22, up 7.5%, driven by volume and price growth. EBITDA including other revenue was at INR850 million, in Q3 FY ’23 as compared to INR803 million, in Q3 FY ’22. Growth of 6% y-o-y, this would translate into an EBITDA margins of 29% for the quarter. Profit-after-tax was at INR386 million, in Q3 FY ’23 as compared to INR379 million, in Q3 FY ’22.

On consolidated basis, operating revenue for Q3 FY ’23 was at INR3,827 million as compared to INR2,662 million in Q3, FY ’22, up 44% y-o-y. EBITDA including other revenue was at INR1,080 million, in Q3 FY ’23 as compared to INR800 million, in Q3 FY ’22. Growth of 35% y-o-y, this would translate into 28% EBITDA margin for this quarter. The lower EBITDA margins were because low EBITDA margin of Tanfac industry compared to Anupam’s margin. Profit-after-tax was at INR544 million, in Q3 FY ’23 as compared to INR379 million, in Q3 FY ’22. A growth of 44% y-o-y. Please note, consolidated numbers for Q3 FY ’22 does not include Tanfac industries number.

Moving on to segment-wise performance for the Q3 FY ’23, our Life Sciences segment contributed around INR231 crores, while other specialty chemicals contributed to INR52 crores. In percentage terms, life sciences segment contributed 82% of the total revenue and the balance came from other specialty chemicals. As far as revenue breakup is concerned in terms of geographies. In Q3 FY ’23, the contribution from Europe was 30%, India 38%, Japan 15%, Singapore 15%, and the remaining 3% came from China. Exports for the quarter was around 62% and continues to be a major contributor to the revenue. Our top 10 customers contributed to 91% of the total revenue. And there are 24 products that we provide to them. As mentioned in our previous call, we plan to moderate the contribution going-forward. And as we introduce more-and-more products this consultation is going to expand and go further.

With that being said, we will open the floor for Q&A. Thank you.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] The first question is from the line of S Ramesh from Nirmal Bang Securities Private Limited. Please go ahead.

S Ramesh — Nirmal Bang Securities Private Limited — Analyst

Thank you, and good evening. So, here I want to start with, what Anand bhai mentioned in terms of the new products, that emphasis on fluorination chemistry. Sir, if we then indicate to what extent it will help to in terms of the growth in revenue over the next two years? And what will be the impact on EBITDA margins? That would be useful.

Anand Desai — Managing Director

So, Ramesh bhai, I would like to just add a brief note first. And then on the specifics, Vishal, take the question. On the brief note on the phasing side. All these quarters, as we mentioned in the past, we have been working on that, it’s up three, four years. The customers had also about our supply-chain. So how we will be building a supply chain. And they would want, they would have asked us. I mean, they had after that they will go-forward to this quarter only ones who are clear with supply-chain.

Once the Tanfac was in hand, the customers change and came to back — we can start the business now. And so that is how all these products are putting in-place now. We understand that there is a lag, time lag to introduce the products, but we have been working on this products since three, four years. It is only that the customers have asked us to start the business, only then the Tanfac accretion was in-place which is there now and this is how is we — a subject.

I would now ask Vishal bhai to take or go ahead of the very follow-up question of —

Vishal Thakkar — Deputy Chief Financial Officer

Thank you, Anand bhai. So, Mr. Ramesh what we had mentioned earlier also. And based on the consulting firm’s feedback as well. But from the pipeline that we have been building up on what Anand had mentioned. We are looking at a revenue of $220 million to $260 million over next three to five years and we see that revenue starting to build-up in next one to two years and growing further. We also, as we had mentioned earlier also, today also 12% to 15% of our revenue comes from fluorination chemistry. And as we go, we will keep on introducing these products. Which will only contribute to the numbers. Coming to the margin side, typically, these are all high-value products. As Anand and I had also mentioned. And this should have a higher EBITDA margin. However, for the sake of caution, we would attempt to guide that out of EBITDA margin shall continue in the similar range that we have seen in the past.

I hope that clarifies, Mr. Ramesh.

S Ramesh — Nirmal Bang Securities Private Limited — Analyst

So, to get some more light on this, in fourth-quarter, will we see with adding materially to your revenue compared to, say, the year-ago level? And if you look at FY ’24 and 25 if you can just indicate, out of this $220 million over five years. How much of that do you expect in the next one, two years? Will be equally spread — it’s time. So that would be very useful in terms of, you know, within estimate from this business over the next two years?

Vishal Thakkar — Deputy Chief Financial Officer

So, Mr. Ramesh, as we had also mentioned that and what Anand has also initially indicated as well that these take time to A, to commercialize and B, once it is commercialized. It will basically have its own growth curve to go to the potential. So that’s how one should see it. So if you see in the early part we will have a limited contribution. And as we go further, the contributions shall start increasing significantly and that’s what we can guide for now. At later-stage, we can get more specific in terms of numbers. But today, we will say that this is one would want to see this.

S Ramesh — Nirmal Bang Securities Private Limited — Analyst

Just to clarify, the products environment in fluorination.

Vishal Thakkar — Deputy Chief Financial Officer

Sorry, I missed your question.

S Ramesh — Nirmal Bang Securities Private Limited — Analyst

The products, which Anand bhai mentioned will be launched in — based on fluorination chemistry commercialization has been excellent between you and the customers to develop them.

Operator

I’m sorry to interrupt you Mr. Ramesh, but your voice is breaking. So we are unable to hear you.

S Ramesh — Nirmal Bang Securities Private Limited — Analyst

Can you hear me now?

Operator

Yes, please go ahead.

S Ramesh — Nirmal Bang Securities Private Limited — Analyst

Yeah, so just to clarify. The number of products which Anand bhai mentioned, you going to start from fourth quarter. Are they just agreements with your customers, or are they already commercially. This is a lead-time for commercialization. I was just wondering.

Vishal Thakkar — Deputy Chief Financial Officer

No, So as, what Anand mentioned, when we say commercialize, which means that it will be there — we will be selling them to them. The question is, it will take, it’s time to come into the volumes that we really liked — to be, but the numbers will start coming in from this quarter as well, right.

S Ramesh — Nirmal Bang Securities Private Limited — Analyst

Okay, we are commercial, but the ramp-up will take time. I understand. Can I squeeze one more question, now in terms of capex, what is our view for the full-year this year? And what is the plan for FY ’24?

Vishal Thakkar — Deputy Chief Financial Officer

So on capex next year. We are looking at around about INR300 crores of capex that we would be deploying for the next year and that’s the number and the year-after, we should be looking at around that. Another INR250 odd crores, so that we are able to deploy full capex that we had planned and declared in the next 18 months to 24 months.

S Ramesh — Nirmal Bang Securities Private Limited — Analyst

Okay, so, finally, can you give us some guidance on how you expect the Tanfac operations and investments. What capex there because they’re obviously going to have supply-chain linkages the Tanfac and also adding to a consolidated revenue. So, if it’s possible, if you can give us some thoughts on Tanfac reuse.

Vishal Thakkar — Deputy Chief Financial Officer

So Tanfac is separately listed company, however, let me give you just a bit of perspective from our side. Tanfac will have its own on growth journey, they’ve done a good quarter this quarter. And we believe that they should be doing good set of numbers over the next few years, has been. They will deployed their own capital and new capex and we are working with from Anupam we are providing them with technical expertise as well as marketing expertise and product knowledge to help them, you know commercialized products faster, and well. However, they will have their journey with their own balance sheet financing. And we will be using them for our supply-chain and that’s where it would be for the dosing visits each of us.

S Ramesh — Nirmal Bang Securities Private Limited — Analyst

Okay, thank you very much. I’ll join the queue. Wish you all the best. Thank you.

Vishal Thakkar — Deputy Chief Financial Officer

Thank you. Thank you very much.

Operator

Thank you. [Operator Instructions] The next question is from the line of Ankur Periwal from Axis Capital. Please go ahead.

Ankur Periwal — Axis Capital — Analyst

Yeah, hi sir, thanks for the opportunity. Just continuing with the new product launches. The initial comments suggested five odd products, largely for the fluorination business there. The ramp-up while there will be a gradual improvement from a product approval stands. One, how many more products, should one expect here apart from the five that we are planning in this quarter in Q4. And second, what timeframe should we consider in terms of a visible delta in terms of our revenue growth.

Vishal Thakkar — Deputy Chief Financial Officer

Anand you want to take it or should I take it.

Anand Desai — Managing Director

No Vishal, you go ahead.

Vishal Thakkar — Deputy Chief Financial Officer

So if we have around 14 products that are under pipeline, and that’s what we are looking at commercial a launching it in next 12 to 18 months. Which what Anand has mentioned that Five-Year look at the three to Five-Year looking at it in this quarter itself next itself, which is Q4, and we believe that we should be able to launch a six to eight molecules every year from then on for next.

Ankur Periwal — Axis Capital — Analyst

Sure, and just one more product approvals perspective any timelines that you’re looking at, because it will be catering to different industries, as already to grow or industrials.

Vishal Thakkar — Deputy Chief Financial Officer

Yes. When we are saying commercializing, we are also looking at so we have accounted for the approvals and the validation from the customers as well and this standalone is inclusive of those permissions and validations from the customers.

Ankur Periwal — Axis Capital — Analyst

Okay, great. And your revenue guidance of 25% plus. Does that include the benefit of these products as well or these products are top-up and the core business will grow at 25%.

Vishal Thakkar — Deputy Chief Financial Officer

No. For us, fluorination is also core business and I’m good as you likely and in fact, we would be looking at it on a Anupam basis. Anupam, stand-alone basis, we are looking at this numbers. And in fact shall be over and above that, but Anupam stand-alone will be this guidance that we are seeing.

Ankur Periwal — Axis Capital — Analyst

Sure, fair enough. And just lastly from a working capital perspective. Will this business be very different from the current business and your thoughts there from an improvement perspective.

Vishal Thakkar — Deputy Chief Financial Officer

On the working capital side, we would love to have a business which is more of a stable business, which is where the business model will try to keep it. However, we believe that the working capital, shall be more efficient than what it is today, and for our core business also, we will be looking at a downward trajectory as we have been seeing it. And also for the for these products also, we will have a more favorable working capital type working capital just process, working capital cycle.

Ankur Periwal — Axis Capital — Analyst

Okay, fair enough. That’s it from my side. Thank you.

Vishal Thakkar — Deputy Chief Financial Officer

Thank you, Ankur.

Operator

Thank you. The next question is from the line of Saurabh Kapadia from Sundaram Mutual Fund. Please go ahead.

Saurabh Kapadia — Sundaram Mutual Fund — Analyst

Yeah, thanks for the opportunity, sir, in your presentation, you have mentioned about that you signed two context with leading European companies in Q3, if you can provide some detail in terms of and timelines.

Vishal Thakkar — Deputy Chief Financial Officer

So thanks, Saurabh for this, so sort of this — this is not a very large contract in terms of revenue, if you were to look at it will be around INR100 crores of revenue that we would look over next four to five years. However, what this was more important and why we have been — why we have highlighted this in the presentation as well is that this is this is a product which these are the products where our customers really wanted it fast and they were wanting to move-out of Europe and this is where this is a product which is coming straight out of Europe to our portfolio and we could do it in a very short-time period. And that’s where we were it seems that the Europe plus one strategy is now coming Europe plus one moment out of strategy or whatever we want to Call-IT that has now started playing out and our ability to respond with that agility to serve our clients was something which was a system in this contract. And that’s where we just wanted to share this with our stakeholders.

Saurabh Kapadia — Sundaram Mutual Fund — Analyst

So is it with one of our existing clients.

Vishal Thakkar — Deputy Chief Financial Officer

Yes, it is with one of our existing clients, you see like.

Saurabh Kapadia — Sundaram Mutual Fund — Analyst

Okay. So talking about the overall, working capital, you mentioned it see a downward trajectory, but in earlier call you mentioned that if I inventory cycle, if we look at it will come down to FY’21. So should we expect by end of Q4 that should be the way ahead.

Vishal Thakkar — Deputy Chief Financial Officer

Yes, we have been were fairly — we’ve seen the trajectory. Well, we. So that it should be in the range of 230 to 240 kind of numbers that is in terms of this that we have been tracking. And one more indicator that I can share with you is that, for the nine months, we have been able to generate operating cash-flow from the INR55 crores and in this quarter itself, we have done INR57 crores of operating cash-flow, which is significantly higher than the profit-after-tax as well. So this itself is also giving us a bit of a clear indication on where our working capital is moving.

Saurabh Kapadia — Sundaram Mutual Fund — Analyst

Okay and sir, just last one on the gross margin and the other expense. So if you look at gross margin have come off slightly compared to last quarter. While if look at other expense that also reduced so any structured credit and contracts.

Vishal Thakkar — Deputy Chief Financial Officer

So I think. Well, the way we see our business and where we try and model, our business is that it is as we’ve mentioned as well that we tend to work with our customers based on at PBT levels are at the product really looking at is EBITDA levels, because that’s where the things because there a few products with the cost-of-goods-sold is less and overheads are higher, whereas the product that our cost-of-goods-sold is high-end over a low. However, at the PBT level is where we are.. EBITDA level is where we would really discuss and negotiate with the customers and that’s the number that remains consistent, and I guess one thing on the right. So that’s why we would tend to be there. So I would look at it from that and depending on the product portfolio, you would see that the number of gross margin and overheads would vary from a quarter-to-quarter.

Saurabh Kapadia — Sundaram Mutual Fund — Analyst

Okay, was there any one-off cost due to fire.

Vishal Thakkar — Deputy Chief Financial Officer

No, because we are fully-insured. So to that extent there is no cost.

Saurabh Kapadia — Sundaram Mutual Fund — Analyst

Okay, thank you. All the best.

Vishal Thakkar — Deputy Chief Financial Officer

Well, thank you.

Operator

Thank you. The next question is from the line of Rohit Nagraj from Centrum Broking. Please go ahead.

Rohit Nagraj — Centrum Broking — Analyst

Yeah, thanks for the opportunity and good afternoon, sir. So first question is during the nine months, what would be the revenue contribution from the alloys that we signed during FY 2022, so as I understand, we signed close to about INR2,600 crores of alloys with four to Five-Year and-or. So what will be the contribution during nine months.

Vishal Thakkar — Deputy Chief Financial Officer

Alloys and contracts, this nine months-to see around. The INR75 crore to INR80 crores in this nine months. And as we go let’s say, we should be able to ramp it up to at least INR200 crores plus. And next year onwards post that FY ’25, we should be able to have a full portfolio — full cover a full value that of the contracts that we would have expected from them, so which is basically INR475 crores odd coming from this LOIs and contracts.

Rohit Nagraj — Centrum Broking — Analyst

Right. Got it, and excluding the LOIs and contracts. So for our legacy plant or legacy business. What is the kind of growth rate that we expect. I mean, these will be additional that will be coming in apart from this, obviously, will be adding a fluorination products from Q4. So, revenues from that also will be ramped-up. So on the legacy business, what is the growth rate that we target based on the I think we have also done some debottlenecking based on those assumptions?

Vishal Thakkar — Deputy Chief Financial Officer

The way to look at it is, these are all my product portfolio and my business. So if I were to slice it into two and say my legacy business and new business, because every year, our growth will be driven by two or three different factors. One is my existing portfolio, giving me a volume and price escalation. Two is coming from the newer products that we introduced and also the newer chemistry that’s been reduced. But if you look at it, that’s where we would suggest numbers would historic will be in terms of total growth is where we should be looking at across all the three — one, if you try and slice without it may not be accurate because what. There are products which are last quarter last year and last quarter, and they will have their own ramp-up. So that would be really challenging. But if I were to give you a guidance as we have been giving, we should be able to do 25% plus growth rate over the next year and you can take those numbers for the future as well.

Rohit Nagraj — Centrum Broking — Analyst

Right.

Vishal Thakkar — Deputy Chief Financial Officer

I think, I am helpful enough.

Rohit Nagraj — Centrum Broking — Analyst

Yes. That’s really helpful. I would just go to come on that question in terms of guidance, just one number which I missed, FY ’23, what would be the capex, so. I think you said FY ’24 will be INR300 crore and year-after that INR250 crore. And we have done INR100 crores during the nine months.

Amit Khurana — Chief Financial Officer

It will be around INR170 crores odd, INR170 crores, INR175 crores and — number in terms of capex.

Rohit Nagraj — Centrum Broking — Analyst

Right, just one clarification for the next couple of years for the capex, given that our — CFO is increasing. Do we need any additional debt to fund it?

Vishal Thakkar — Deputy Chief Financial Officer

No, we are fully-funded in fact I will be generating more cash-out of my business because if you look at it, I am fairly funded on the day one. We will need no debt to grow, do the capex that we budgeted for now.

Rohit Nagraj — Centrum Broking — Analyst

Sure, that’s all from my side. Thank you so much and best of luck.

Vishal Thakkar — Deputy Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Vidit Shah from IIFL Securities. Please go ahead.

Vidit Shah — IIFL Securities — Analyst

Hi, thanks for taking my question. My first question was on the working capital front. Just if you could give us a status update on the negotiations that are happening on customers to make billing by annually. Semi-annually, sorry. How they’ve gone. How many you like what percentage of revenue-generating customers have agreed to this and how many are pushed back on it?

Vishal Thakkar — Deputy Chief Financial Officer

So as we say — I can say that around those 60% odd, a little higher than on the contracted revenue, we have been able to move that. Others we are working with them. And as you know, these are all large corporates with their own internal systems and processes and so many years of their billings. It will it will have its own time, but we are moving ahead, and if you see the kind of operating cash-flow that you are seeing, this is also a reflection of one-off of this as well.

Vidit Shah — IIFL Securities — Analyst

Okay, so 60% of revenue has been move to six months billing and the rest is being negotiated. Is that the way to look at it?

Vishal Thakkar — Deputy Chief Financial Officer

Yes, just 60% of contracted revenue. Yeah, you are right.

Vidit Shah — IIFL Securities — Analyst

Okay, got it. And on the revenue front, we lost if roughly INR45 crores of revenue Unit 1 — availability of capacities. I believe one unit has restarted, one is still pending. So, when do you expect that unit to be back and running and how much loss could we anticipate in 4Q?

Vishal Thakkar — Deputy Chief Financial Officer

So just adding. So I believe that we should be able to start the other also soon. We do not see any significant loss of revenue comes because of the unavailability of these plants, maybe if at all, if it will be INR5 crores to INR10 crores at max, maybe, but I’m not wanting to guide on that number from now, let’s just wait for a little bit time before we can add-on that. But we don’t see significant ones, we are hopeful to get the permission soon.

Vidit Shah — IIFL Securities — Analyst

Okay. I got it and just one last question on the capex schedule, the fluorination capex of INR420 crores. Any specific dates when parts of this would be commissioned 18 to 24 months I think you said, but you know when and how much would be commissioned. If you could just dwell all into detail into the schedule of commissioning of plant?

Vishal Thakkar — Deputy Chief Financial Officer

So we are looking at commercial– starting one plant maybe by March 24, but just give us some, it’s little outright. So we have a plan, but probably a quarter more and we will be able to give you a better visibility as well. Today the plan looks like that this in this timeframe, but please don’t hold us with the dates till at least one more quarter and then we can be more color on that. I hope that fair and fine.

Vidit Shah — IIFL Securities — Analyst

No, that’s fine. Thanks. Thanks so much for answering.

Operator

Thank you. The next question is from the line of Siddharth Gadekar from Equirus. Please go ahead.

Siddharth Gadekar — Equirus — Analyst

Hello. Yeah, so you just spoke about one opportunity from a European customer coming to us because of the energy crisis and other issues. So is it fair to assume that this order might be sticky in nature and the customer will not restart the plant, once energy crisis normalize in Europe or how should we look at that revenues?

Vishal Thakkar — Deputy Chief Financial Officer

Anand, would you want to take it shall I continue with this?

Anand Desai — Managing Director

Please continue.

Vishal Thakkar — Deputy Chief Financial Officer

Okay, on the, if you really look at it, whenever two things. Let me make the statement that. Our understanding is that the energy prices, new normal for the energy in Europe will be disciplined, then the old numbers of energy in the Europe. And that I think that we believe that should play-out. However, having said that. I would also say that typically what we have seen historically. We had also — is that once the product moves out of Europe to a country like India or China, it doesn’t go back, because these are not like somebody is saying. I have a trouble for six months, please do work for me and then take it back. These are more long-term in nature, there are more strategic in nature and that flow happens. If you see this flow It was not as if that products were not moving from Europe to China and India or China and India, however, what happens with these kind of events happening.

There is accentuation or the hastening of that process that happens and the products moves earlier in the lifecycle than the latter in the lifecycle and that’s what we have been seeing and that’s what we were also trying to mention by that LOIs that we mentioned and that’s the process. That’s the driver, that’s a trend that we are trying to just say that there is some bit of a green shoots or validation of that trend that we would be anticipating. And that’s what we are saying, so to answer your question, we believe that we have a reasonable comfort that the product that comes here, doesn’t go far. Because we will not take products which are for six months or 12 months. We would take products which are for five years, three, five, seven years and lifetime.

Siddharth Gadekar — Equirus — Analyst

Sir, got it. Sir, secondly, you also spoke about some more commercialization is coming in the fourth-quarter in the next year. Now, are these some new opportunities, or these are also something that is moving out from Europe? How should one look at these kind of opportunities?

Vishal Thakkar — Deputy Chief Financial Officer

So if you see, we always have a pipeline and if you see, we have a product that kind of 90 — Europe products that we have mentioned in our presentation as well. And these are the pipeline products, which gets mature over a period of time. And as we said in the historical conversations as well, that six to eight is the kind of a number that we see. We will be able to commercialize and that’s — these products are the result of the efforts of this product pipeline.

Anand Desai — Managing Director

No, I was just getting, like if we are looking from Europe plus one opportunity. Are we seeing any incremental traction because of that? Or these are the regular businesses, which is coming in now incrementally? No, so you’re right, so that we are seeing in two different factors if you were to see. Europe plus one, if you were saying, then we can talk about that. One is that the new inquiries of newer products is coming in more-and-more, and our pipeline is getting more-and-more wider and more fuller in that sense.

And but however that takes 6, 9, 12, 18, 24 months-to really get into a commercialization plan. Second thing, what happens is that what we were talking to them earlier and what they were looking at it, let’s say launching into doing a transfer in 24 or 25, as moved to 24 or 20 — we just so the period-end got little pulled up is the one and two is, they have also some, come in improved volume projection that has given. So like in few contracts we had seen that the committed volumes have gone up, so there are two-level of positive that we can see here.

Siddharth Gadekar — Equirus — Analyst

Okay, I got it. So I mean —

Operator

Sorry to interrupt you Mr. Gadekar. May we request you to please rejoin the queue we have participants waiting.

Siddharth Gadekar — Equirus — Analyst

Yes, sure.

Operator

Thank you. [Operator Instructions] The next question is from the line of Ratish Varier from Sundaram Mutual Fund. Please go ahead.

Ratish Varier — Sundaram Mutual Fund — Analyst

Yeah, thanks for the opportunity. I had one question. Am I audible?

Operator

Yes, you are. Please go ahead.

Ratish Varier — Sundaram Mutual Fund — Analyst

Just had one question with respect to working capital, rather than earlier couple of questions, but just to get some clarity. Couple of calls back we had mentioned that if I’m not wrong, we had mentioned that, because of various global supply-chain issues, et-cetera. We are holding on to higher inventory, as per the customer requirements. And second, the earlier participant, one of the questions you had answered now that six months contracts were moved upwards of 50% more than 50%. So I’m just trying to understand, where do we see our working capital settling over the next, two, three quarters or next year. And all this 60% of coming in six months. How should we look at it from the working capital perspective, number-one? And second, regarding the earlier question of normalization of inventory. How much of that would have got normalized and how much more do you expect just kind of give us some thoughts on this?

Vishal Thakkar — Deputy Chief Financial Officer

Sure on the inventory side, if you look at it, the numbers as we have mentioned that these numbers are dropping and which will continue to the number of — base for the inventory will continue to drop. The numbers guided for the for the full-year is around 230 to 240 kind of number. And as we go, as we enter the next year. We been see that trajectory continuing. And we should be looking at numbers going further down and around 200 and below, over a period of next three to six quarters.

Ratish Varier — Sundaram Mutual Fund — Analyst

It’s another — so the six months when we are seeing how it is impacting our working capital just so —

Vishal Thakkar — Deputy Chief Financial Officer

So what happened — yeah, so because we do expect to see, but we do annual pricing that you need to stock up accordingly. Because you have a one big space and you don’t typically get the one fixes price — our suppliers, and even if they give you there for a month or two or three, so we need to hold inventory in that sense. The moment, you go to six months that requirement of the inventory holding to hedge the price reduces to that extent and that further translates into a more lesser working capital intensity on in terms of inventory.

Ratish Varier — Sundaram Mutual Fund — Analyst

So because of this, sorry, one clarification again on this. So because of this six months, how much would have are work — inventory days are working capital reduced because now I think as you mentioned, 60% is more towards six months, right. Compared to last year now, what would have been the benefit? Thanks.

Vishal Thakkar — Deputy Chief Financial Officer

So, see II would not want to put — there are very different — so there address multiple factors playing out. One is your cautionary inventory dropping down, two is your — the six month pricing — pricing structure, and three is also the inventory dropping because of mature cost of inventory dropping as price of agreement is dropping as well. So I’m not able to put one point on finger and said this is the exact number, because of this. However, in total, as we said, we have been able to reduce it, what we mentioned in the last quarter as well. And we believe that the total number will come down to this level what we have said. So apologies if I not able to give you an absolute number, but that would be little difficult to answer that today.

Ratish Varier — Sundaram Mutual Fund — Analyst

Thank you.

Operator

Thank you. The next question is from the line of Pankaj from Affluent Assets. Please go ahead.

Pankaj Prabhakar Bobade — Affluent Assets — Analyst

Thanks for taking my question. Sir in answer to one of the participants, you mentioned that the total opportunity. The order book for the fluorination business would be around for $200 million to $220 million. I suppose, this would be over a period of time for five years cumulative. So just wanted to understand would this the business repeating again or it could be one-time business? Second question is. We have a pipeline of six to eight molecules launch every year as you mentioned. So and currently we are having margins of around 28%, 30%, so how sustainable are these margins in the wake of these launches? And the third question is. Given that top 10 customers of ours, contributed, 91%, 90%, 91% of our revenues. What are we doing to rationalize this? Thanks.

Vishal Thakkar — Deputy Chief Financial Officer

Okay, so first is, when we mentioned that it is to $220 million to $240 million. We are talking about annual revenue that we are talking about, that is the first thing. And so we believe that number continues, because if you see historically, the product that we sell today we continue to sell it for the longer-term and a longer tenor. So that’s the first answer to the question.

Second, I missed your question. Can you please repeat the second question please?

Pankaj Prabhakar Bobade — Affluent Assets — Analyst

Sir, another question are top 10, customers contribute 91% of the revenues, what do we do to rationalize this rather reduce this dependency?

Vishal Thakkar — Deputy Chief Financial Officer

Okay, so see, if you look at this trajectory has been there, if you see, earlier, to, five to seven, eight years back, are two customers used to contribute 80% to 90% of our revenue today. That is 10 customers. And in terms of products, if you look at it at 24 products servicing these clients to contribute to 80% to 90% of revenue. If you look at it, that’s one. And as we continue to introduce more-and-more products and also cater to do more-and-more customers as we have mentioned and that’s as what Anand also said in his opening statement. We will — that number will continuously drop further and but just to give you one context that if you look at from agrochemical side, the top five agrochemical players would contribute 70% to 80% of the revenue. Of the 70% of the market and to that extent, there is so much that you can diversify beyond a point in the industry, which is structurally in this manner.

Pankaj Prabhakar Bobade — Affluent Assets — Analyst

Okay, sir. You mentioned that.

Vishal Thakkar — Deputy Chief Financial Officer

Having said that, we continue to expand our product customer-base also if you look at it today, we 27 MNC customers with over 70 customers. Today, we have around 50 products. So as we expand the number of customers and number of products that diversification shall continue to happen.

Pankaj Prabhakar Bobade — Affluent Assets — Analyst

Okay. Sir you mentioned that $200 million, $220 million of revenues from fluorination in annual number. So this I suppose would be maybe five years down the line. So you mean to say five years down the line fluorination business would be as big as what our business currently is? And one of the question I also mentioned is that, since we are launching six to eight molecules every year, how sustainable are margins to the tune of 20% to 30%?

Vishal Thakkar — Deputy Chief Financial Officer

Yes. The answer to your first question on fluorination, fluorination will be a sizable business for us, so that’s something we say which I agree with you. As we launch new and newer products that continues. However, if you see historically also, we have been introducing multiple number of products and we have been able to maintain the margin. We believe that, we will be able to pull that margin and the way we do our business we have lot of value addition, we do complex chemistry, with multiple steps in terms of processes, which will lead to a margin, which will let us have the margin that we have been asking to our customers and that’s that model where we do a transparent cost-plus model where we expect this kind of a margin, and that’s how we do our business. So we don’t that number changing anything significantly from here on.

Pankaj Prabhakar Bobade — Affluent Assets — Analyst

So our product front, all launches are mainly specialized silicon, not commodity?

Vishal Thakkar — Deputy Chief Financial Officer

Yes.

Pankaj Prabhakar Bobade — Affluent Assets — Analyst

Okay, thank you.

Operator

Thank you. The next question is from the line of S Ramesh from Nirmal Bang Securities. Please go ahead.

S Ramesh — Nirmal Bang Securities Private Limited — Analyst

Good morning, thank you very much for the follow-up. So one of the thoughts I had, when compared second-quarter with third-quarter your sales revenue has declined more than the decline in the cost-of-goods-sold, including the change in inventory. So the sales have declined by INR28 crores odd cost-of-goods-sold has declined by INR10 crores, so is there a lagging the kind of pricing you’re taking or is it that some of the products are enjoying lower margins in this quarter, how do you explain this on a sequential basis, on a quarter-on-quarter basis?

Vishal Thakkar — Deputy Chief Financial Officer

So Ramesh it is more to do with product mix because the total products, which are — what are the products which we have sold, as I was mentioning earlier also that is the product mix changes and there are few products, which have a higher gross margin versus higher gross margin and lower overheads versus lower gross margin and higher overheads. So it’s all to do with the product mix that is there, nothing really has been changed in terms of ability to pass the prices, otherwise. And that’s why if you look at from an EBITDA point-of-view, our EBITDA percentages will be similar to what we have been — Q3, Q2.

S Ramesh — Nirmal Bang Securities Private Limited — Analyst

Okay, so. I guess let me just take the discussion further in the context of this global slowdown recession and the commodity deflation. We are seeing prices across chemicals falling. Should we assume that in your contracting business, you are not likely to see any inventory losses or the cost of high-cost inventory that hurting margins, maybe for one or two quarters and you will see, if we are able to ramp-up your volumes and higher-margin that should then translate into higher margins. Is that the way to understand. Because in chemicals, typically when you have one or two quarters of prices coming down, there is a high-cost inventory, which hurts your margin. So, is that risk less because of the structure in terms of your reliance on the contracting business?

Vishal Thakkar — Deputy Chief Financial Officer

Yes, you are right, that’s the case, because my customers know what quantity, I bought for them and at what price for. So that is pass-through. And that does not lead to any impact or any inventories downs or write-ups for us.

S Ramesh — Nirmal Bang Securities Private Limited — Analyst

Okay, thank you very much.

Vishal Thakkar — Deputy Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Rohit Nagraj from Centrum Broking. Please go ahead.

Rohit Nagraj — Centrum Broking — Analyst

Yeah, thanks for the follow-up. Sir, just one question in terms of guidance, so in nine months we have done top line growth of about 21% and earlier, last quarter we were guiding close to about 30% plus. So what is the guidance for FY ’23 and I think for FY ’24, you had mentioned 25% plus guidance. So just wanted to have, what would be the base for FY ’23?

Vishal Thakkar — Deputy Chief Financial Officer

So FY ’23. So I don’t want to hazard — I don’t want to really guide. I think, exact number, because that would not be a very ideal way of saying that, but if you see that number of — and we should be able to go at least to 300 to 400 bps more than this number for an annual basis.

Rohit Nagraj — Centrum Broking — Analyst

All right. And just one more clarification again, on the sequential basis there is a — the interest has absolute interest cost has reduced by a couple of crores. So is it because of the working capital coming down? And would this be run-rate which we can take it forward?

Vishal Thakkar — Deputy Chief Financial Officer

So yeah, you’re right, that is an efficiency in the working capital that has reflected in the interest cost and as we move that this should improve as well. But just mind you that we are also doing capital deployment and also growing. But right now, isn’t that number should look at in this range.

Rohit Nagraj — Centrum Broking — Analyst

Thank you so much and best of luck, sir.

Vishal Thakkar — Deputy Chief Financial Officer

Thank you, Rohit.

Operator

Thank you. The next question is from the line of Siddharth Gadekar from Equirus. Please go ahead.

Siddharth Gadekar — Equirus — Analyst

Hi sir, one more question, in terms of the demand, are we witnessing any demand slowdown in our existing orders or any indications because we have got a lot of people talking about high inventory buildup of all the channels. So any sense on that?

Vishal Thakkar — Deputy Chief Financial Officer

So as we had mentioned in last question as well or two questions back. But right now we’re not seeing any revising the demand outlook from our customers. And as we said, also the business model is such that we will have a long-term visibility of these volumes. And secondly, if you really look at it for us at least we have seen that the net effect for — Europe situation has been beneficial for us. As I also mentioned that on our — the few of the contracts when we revised, we got a higher volume, minimum volume guarantees on this. So they have upped it and that’s something that and we are witnessing for now. So for now, I would not say that we have any downward revisions or any cautionary indications that we’ve got from our customers.

Siddharth Gadekar — Equirus — Analyst

Sir, are received indicative volumes for the FY ’24 that is still pending?

Vishal Thakkar — Deputy Chief Financial Officer

So as I said that we have a visibility. The contracts out there with this and every– the volume practically there and it’s about the price that we revised every six months and 12 months as the case be.

Siddharth Gadekar — Equirus — Analyst

So in terms of volumes, we don’t see any major issues going ahead also at least for the next three to four quarters. Would that be a fair assessment?

Vishal Thakkar — Deputy Chief Financial Officer

That’s a fair assessment.

Siddharth Gadekar — Equirus — Analyst

Okay, sir. Got it. Thank you so much.

Vishal Thakkar — Deputy Chief Financial Officer

Great, thank you.

Operator

Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. We apologize to the participants who did not get the chance to ask questions due to time limit. I now hand the conference over to the management for closing comments.

Vishal Thakkar — Deputy Chief Financial Officer

Thank you, everyone, for your questions. We hope we have been able to answer most of your queries. If you missed out on any questions or queries, kindly reach out to us through our IR Advisors, EY, and we will be happy to get back to you on an offline basis. Hope you have a good weekend. Look forward to your continued support in our growth journey. Thank you.

Operator

[Operator Closing Remarks]