India Pesticides Ltd (IPL) Q3 FY23 Earnings Concall Transcript

India Pesticides Ltd (NSE:IPL) Q3 FY23 Earnings Concall dated Feb. 06, 2023.

Corporate Participants:

Dheeraj Kumar Jain — Chief Executive Officer

Satya Prakash Gupta — Chief Financial Officer

Analysts:

Tejas Sonawane — Dolat Capital — Analyst

Rahul Jain — Credence Wealth Management — Analyst

Ayush Mittal — Mittal Analytics Private Limited — Analyst

Nagesh Jain — NB Investments — Analyst

Ankit Gupta — Bamboo Capital — Analyst

Chintan Mehta — Prudent Broking Services Private Limited — Analyst

Senthilkumar Natarajan — Joindre Capital Services — Analyst

Bhavin Chheda — Enam Holdings — Analyst

Unidentified Participant — — Analyst

Prateek Singhania — SageOne Investments — Analyst

Yogansh Jeswani — Mittal Analytics — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Q3 and 9M FY ’23 Earnings Conference Call of India Pesticides Limited, hosted by Dolat Capital. [Operator Instructions]

I now hand the conference over to Mr. Tejas Sonawane from Dolat Capital. Thank you. And over to you, sir.

Tejas Sonawane — Dolat Capital — Analyst

Thank you, Aman. Good afternoon, everyone. On behalf of Dolat Capital, I would like to thank the management of India Pesticides Limited for giving us the opportunity to host their Q3 FY ’23 earnings call. From the management team, we have with us today, Mr. D.K. Jain, Chief Executive Officer; and Mr. S.P. Gupta, Chief Financial Officer.

Without further ado, I would like to hand over the call to the management for their opening remarks, post which we will open the forum for a Q&A session. Thank you. And over to you, sir.

Dheeraj Kumar Jain — Chief Executive Officer

Thank you, Tejasji. Good afternoon, ladies and gentlemen. I hope you and your family are staying safe and healthy. I take the pleasure of welcoming you all for the Q3 FY ’23 earnings conference call of India Pesticides Limited. I hope you all had a chance to look at the financial statements and earnings presentation, uploaded on the exchanges and our website.

Despite the inflationary pressure, our margins saw an improvement on Q-on-Q basis due to improved operational efficiency and cost pass-through. The company performed well with a 16.1% Y-o-Y revenue growth, driven by higher demand for existing products and new molecules. High cost own material inventory and high fuel prices have been a challenge during this period also.

Our R&D capabilities, including the ability to create substitute chemicals and decrease reliance on imports are critical components of our strategy. All of our recently launched products were well received by market and we expect their demand to grow going forward. Further to this, our planned INR70 crores capex for expansion at Sandila plant in FY ’23 is on schedule. We are happy to announce that the Ministry of Environment and Forests has granted us environmental clearance for our Hamirpur project under our wholly-owned subsidiary, Shalvis Specialities. We anticipate starting operations during the fiscal year ’23, ’24.

Our export component increased to 68% from 49% in Q2 FY ’23. The increase has been driven by the company’s focus on expanding the global reach and building strong relationships with international customers and expanding customer base. The company’s strengthening of R&D has also played a crucial role in its export growth. India Pesticides Limited has been consistently developing new products that cater to the ever-evolving demands of the global market and its innovative products have been well received by international customers.

As informed to stock exchanges last month, we have recently commissioned a plant for a herbicide with good export potential. During the quarter, our long-term credit facilities were reconfirmed by Care Ratings Limited at A+, which highlights our ability to manage capital efficiently. IPL continues to overcome challenges and emerge stronger despite uncertainty in the business environment. We are eager to rollout new products in the coming quarters to improve product mix and reach consumers.

We assure our shareholders that we are committed to working towards our vision of supporting chemical business and farmers across the globe by producing superior value chemicals through quality and efficiency. India is now a relatively stable economic heaven with strong domestic demand and growing competitiveness in exporting quality goods and services. IPL is poised for success with skilled manufacturing and competitive edge.

With this, I would like to pass on to Mr. S.P. Gupta to walk us through our Q3 FY ’23 financial highlights. Mr. Gupta?

Satya Prakash Gupta — Chief Financial Officer

Thank you, sir. Good afternoon, ladies and gentlemen, and thank you for joining the India Pesticide conference call to discuss Q3 financial year ’23 results. I will quickly go through our financial performance.

Taking you through the financial highlights, the total revenue stood at INR222 crores as against INR191 crores in Q3 financial year ’22. That is Y-o-Y growth of 16%. The growth has been driven by the growth in international markets. EBITDA in Q3 financial year ’23 stands at INR51 crores with EBITDA margin of around 22%. The PAT stood at INR35 crores in this quarter as compared to INR43 crores in Q3 financial year ’22. PAT margin is 15.7% in Q3 financial year ’23. The revenue from exports stood at INR148 crores as compared to INR109 crores in Q3 financial year ’22 and domestic revenue stood at INR69 crores as compared to INR81 crores in Q3 last year. Revenue from technicals and formulations stood at INR184 crores and INR34 crores respectively during this quarter. India Pesticides Limited has a strong balance sheet with the ability to generate good free cash flow. The company is planning to fuel its capex plan with internal accruals. We remain confident of continuing our growth trajectory, while extending full support to our customers, suppliers and other valued stakeholders.

With this, we would be happy to take your questions. Thank you.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] The first question is from the line of Rahul Jain from Credence Wealth. Please go ahead.

Rahul Jain — Credence Wealth Management — Analyst

Thanks for the opportunity. Am I audible?

Dheeraj Kumar Jain — Chief Executive Officer

Yes, sir.

Rahul Jain — Credence Wealth Management — Analyst

Okay. Sir, in the previous two, three quarters, we have had issues with regards to logistic, cost of raw materials going up. In the previous quarter also, you had mentioned about gross margins going down because of high cost inventory and increasing in fuel cost and also logistic costs. At the same time, you had also mentioned that you will — this inventory — high cost inventory will be completely utilized in this particular quarter.

So first question with regards to margins. Yes, we have shown some improvement in gross margins from about 43% to around 45% in the current quarter, quarter-on-quarter. So how soon do we expect the gross margin to reach our 50% mark which we were doing some quarters back given that the high cost inventory must have panned out? That is my question number one.

Dheeraj Kumar Jain — Chief Executive Officer

Sir, inventories, we thought we completely — we have not yet consumed the total high cost inventory. But we feel that by this quarter it will be completely — we will be utilizing the high cost inventory. And with this, for the next quarters, our margin should improve.

Rahul Jain — Credence Wealth Management — Analyst

Okay. So it will take another couple of quarters to reach back around 50%, 51% gross margin?

Dheeraj Kumar Jain — Chief Executive Officer

50%, 51%, it will be very difficult to say, but we will try our maximum whatever is possible.

Rahul Jain — Credence Wealth Management — Analyst

Sure. And sir, with regards to capex, we had completed roughly about INR35 crores in the first half and the balance INR35 crores to be done in the second half. So till date, how much capex is completed out of this INR70 crores for the current year?

Dheeraj Kumar Jain — Chief Executive Officer

We have done capex of INR54 crores in nine months.

Rahul Jain — Credence Wealth Management — Analyst

Okay. And the balance will be completed before March?

Dheeraj Kumar Jain — Chief Executive Officer

Before march. Sure, sure.

Rahul Jain — Credence Wealth Management — Analyst

Fine. This INR70 crores plus the earlier INR70 crores, this is that INR140 crores of brownfield capex which we have done at the existing plant will contribute roughly about 2.5 times asset turnover?

Dheeraj Kumar Jain — Chief Executive Officer

Yes, sir. Yes, sir.

Rahul Jain — Credence Wealth Management — Analyst

And how much time, sir, it will take to ramp up this capacity to reach this full utilization to the extent of 2.5 times?

Dheeraj Kumar Jain — Chief Executive Officer

I think it should be by end of this year, that is the FY ’24.

Rahul Jain — Credence Wealth Management — Analyst

Okay. So FY ’24, we can have — with the existing plants, we can surely reach about around INR1,100 crores of top-line? INR1,000 crores to INR1,100 crores?

Dheeraj Kumar Jain — Chief Executive Officer

Yeah, yeah. Easily, sir. No doubt about it.

Rahul Jain — Credence Wealth Management — Analyst

And sir, what kind of contribution we will see from the new products which we have added in the current quarter and also in last previous two quarters? Till date, what is the contribution from the new products? And what is the expected contribution from new products in the next year?

Dheeraj Kumar Jain — Chief Executive Officer

Contribution from new product is around INR25 crores during this quarter. And we are expecting around, say, INR250 crores of incremental turnover during next year from new capacities.

Rahul Jain — Credence Wealth Management — Analyst

Sure. And sir, you had mentioned in your earlier calls that all the new products which you were trying to launch or will launch, typically they will have 50% plus gross margin?

Dheeraj Kumar Jain — Chief Executive Officer

That is our yardstick. But considering this inflationary pressure, I think the gross profit range will be, say, around 46% to 47%.

Rahul Jain — Credence Wealth Management — Analyst

Okay, sure. One last question with regards to the new site. So how much capex do we expect? We had earlier indicated to spend about INR20 crores in the current year in the new site. So typically, what is the amount expected to be done in this new site by year end? And you mentioned that we expect the new site to start commercial production in the next year somewhere around quarter two, quarter three. So next year, what kind of contribution to sales can be seen from the new site, the new greenfield capex?

Dheeraj Kumar Jain — Chief Executive Officer

Sir, actually, the new site is going as per our expectation. We were expecting the meeting for the environmental clearance to happen in November, which did happen, and we got the clearance in the first go. And we are now starting our activities at the new site. And the capex, what we have planned for the next year would be about INR100 crores. And we expect the first two units to be in operation by, say, December, January onwards. And the contribution from that side would be nominal, probably because the plant would be still under stabilization. But from the next year, FY ’25 onwards, it will contribute significantly.

Rahul Jain — Credence Wealth Management — Analyst

Sure. Thank you so much, sir. I have some more questions, I’ll come back in the queue. Thank you.

Dheeraj Kumar Jain — Chief Executive Officer

Okay, okay. Thank you, Rahulji.

Operator

Thank you. The next question is from the line of Ayush Mittal from Mittal Analytics. Please go ahead.

Ayush Mittal — Mittal Analytics Private Limited — Analyst

Good afternoon, everyone. First of all, congratulations on a good performance considering the times that agrochem industry is facing.

Dheeraj Kumar Jain — Chief Executive Officer

Thank you, sir.

Ayush Mittal — Mittal Analytics Private Limited — Analyst

So sir, two, three questions. Sir, first, we are seeing a very big demand supplier mismatch in the agrochem industry, and many of the players are facing very weak demand or inventory correction or they are facing pressure on margins. So on the demand side, are we facing issues or are we broadly in line with what we were planning to grow? And we also had some new product launches for the coming quarter. So can we — can you share more about this aspect?

Dheeraj Kumar Jain — Chief Executive Officer

Sir, demand-wise, we are not facing any weather problems. The products, what we are regularly producing, we are able to sell and the quantities are reasonably okay. I think if we see the total volume what we have done this quarter is slightly more than what we did in the previous quarter. Our previous quarter, we did a technical turnover of about INR3,900 crores — sorry tonnes. And this quarter, we are doing more than 4,000 tonnes.

So demand-wise, it is okay. But the pressure — cost pressure is only because the energy cost has increased a lot. As informed last — in the last conference call as well as in TV interview, our fuel cost has gone up significantly, especially the rice has. If we were to buy around INR300 a quintal, now the price has increased almost to INR1,100, and now it is ranging around INR850 to INR900. So the cost of energy has gone up. And because of the lot of uncertainties in the initial period, we had imported a lot of inventories to avoid any risk of production stock. So that inventories, we are still carrying and which we hope that by this quarter we will be able to consume the high cost inventories.

Ayush Mittal — Mittal Analytics Private Limited — Analyst

Okay, great. So — and sir, there was some new herbicides that you are planning to launch in Q4 and we have done a lot of stocking for that I think. The inventory build-up was due to that.

Dheeraj Kumar Jain — Chief Executive Officer

The herbicide major usage comes in the first quarter of every year, because normally, in April, May, June, the demand would be high on these. There also we are showing the product now and the major sales will happen in the next quarter.

Ayush Mittal — Mittal Analytics Private Limited — Analyst

In Q1 or Q4?

Dheeraj Kumar Jain — Chief Executive Officer

Q4 — Q1. In the last half, Q4 and Q1. Major sales would be in Q1.

Ayush Mittal — Mittal Analytics Private Limited — Analyst

Okay, okay. Yeah.

Dheeraj Kumar Jain — Chief Executive Officer

But we have to build the stock because that is a very short time sale. So that is why we have to build the stock.

Ayush Mittal — Mittal Analytics Private Limited — Analyst

Okay, sir. Sir, the new expansion that we are doing at Hamirpur, we have just got the ECL, you are saying that within a year we’ll be able to build two units. That’s a very short time, but have you already been doing some construction activity or how will it happen? Because usually, it takes two years for a plant to get up and running and then it takes time for approval. So how will we be managing so fast?

Dheeraj Kumar Jain — Chief Executive Officer

Sir, actually, what happened is that after getting the environmental clearance, simultaneously, we are also working on other clearances because we require a lot of clearances from the government. So I will just explain you, after environmental clearance, we also got the ground water abstraction clearance also. We got the permission from them. Similarly, fire NOC we have already received. Then we have made arrangement with our — this landfill system company, Ramky. We are already in the agreement with them. And then we already applied for the consent to establish to the Pollution Control Board.

So these activities are parallelly going on. And we are planning initial stages, a few intermediates. So for intermediates, we don’t have many regulatory requirements in terms of registration at CIB. What is that, the Central Insecticide Board, etc. So we have already shortlisted few intermediates that we will be starting first. So we feel that we should be able to produce something by the third quarter, the fourth quarter of this year. And this is also a must for us because of the tax benefit role that the government has given that the plant has to be commissioned in FY ’24, only then we can avail the concessional income tax of 15%. This will also push us to act a little faster.

Ayush Mittal — Mittal Analytics Private Limited — Analyst

Okay. That’s great to hear, sir. And sir, another 4,000 tonnes we were planning to add at Sandila. Any update on that?

Dheeraj Kumar Jain — Chief Executive Officer

Yeah, that is going on, sir. That is going on. As of today, as we informed last month, we have already added one more herbicide with a very good export potential, but the capacity of that plant would be about 300 tonnes. And then a few more intermediates are under construction, which we will be commissioning maybe in March or maximum by April.

Ayush Mittal — Mittal Analytics Private Limited — Analyst

Okay, okay. Thank you, sir. I’ll get back in the queue.

Dheeraj Kumar Jain — Chief Executive Officer

Okay. Thank you, sir. Thank you, Ayushji.

Operator

Thank you. The next question is from the line of Nagesh Jain from NB Investments. Please go ahead.

Nagesh Jain — NB Investments — Analyst

Good evening, sir. Sir, during the quarter, there is an increase in the export compared to the domestic sale. So first question is, what are the reasons for this?

Dheeraj Kumar Jain — Chief Executive Officer

There has been very good demand for our herbicide as well as recently launched herbicides.

Nagesh Jain — NB Investments — Analyst

Okay. Is it specifically for herbicide only, this increase in sales has happened?

Dheeraj Kumar Jain — Chief Executive Officer

Yes, yes. But existing herbicide had — we have got good export order. And a few quarters back, we have launched one more herbicide that’s exclusively for export. That has got very good export demand.

Nagesh Jain — NB Investments — Analyst

Okay. Sir, just a continuation of this. See, we have our top three products where we have more than 20% market share where our competitors are all these MNCs. And these MNCs must be having their manufacturing plant at either China or maybe some place in Europe. And if it is in Europe, the current increase in power comes. So any information you have got whether they have reduced their production and they’re diverting their requirement to India or something like that?

Dheeraj Kumar Jain — Chief Executive Officer

No. Sir, our major competitors, they are not based in Europe. The major competitor is based in Indira Hills. And they have their products going on. But our — because we have long-term arrangements with our customers, we are able to continue to supply the required quantities to them. And from China, we have not so much of competition at all because the manufacturers of these compounds in China are relatively very small.

Nagesh Jain — NB Investments — Analyst

So I’ll ask you in another way, because — is there any increase in demand for our these three products from Europe markets?

Dheeraj Kumar Jain — Chief Executive Officer

Europe market increase is not — in one product, yes, because that product we have launched only last year. So we are getting good demand for that one herbicide from Europe itself. Europe and the adjoining countries from Europe, from the main European Union and the adjoining countries we are getting good demand for that. And for the other herbicide, we are getting good demand in other countries also.

Nagesh Jain — NB Investments — Analyst

Okay, okay. Sir, now since our IPO, how many products we have launched till date, sir?

Dheeraj Kumar Jain — Chief Executive Officer

Sir, at the time of IPO, we had promised eight molecules to be in the pipeline.

Nagesh Jain — NB Investments — Analyst

Correct.

Dheeraj Kumar Jain — Chief Executive Officer

And out of these eight, we have already launched seven products. With this new herbicide what we have commissioned this month, including that, it will be — this will be the seventh molecule that we have launched. This includes six active ingredients and one intermediate and one more is already under construction, which we are planning to launch soon.

Nagesh Jain — NB Investments — Analyst

Okay. Now you said out of the seven launched, six are technicals and only one is intermediate, right?

Dheeraj Kumar Jain — Chief Executive Officer

Intermediate. Yes, sir. Yes, sir.

Nagesh Jain — NB Investments — Analyst

Okay, okay. So now before this…

Dheeraj Kumar Jain — Chief Executive Officer

It is largely being imported. So it will be an import substitute in line with our government’s initiative of Aatmanirbhar Bharat. So from that point of view, now we are able to manufacture in India.

Nagesh Jain — NB Investments — Analyst

Okay. Sir, before this IPO, I think we had only six products, no? Five fungicides and one herbicide. Is that correct?

Dheeraj Kumar Jain — Chief Executive Officer

We have seven to eight products. We were having two herbicides and six fungicides.

Nagesh Jain — NB Investments — Analyst

Six fungicides. So total eight products, no?

Dheeraj Kumar Jain — Chief Executive Officer

Eight products.

Nagesh Jain — NB Investments — Analyst

Okay. Now why I was asking that question is, of these eight products that you had before the IPO, are we completely backward integrated in those products?

Dheeraj Kumar Jain — Chief Executive Officer

In those products, sir, majority, we are backward integrated, except some critical general purpose intermediates which are available in the market, that we were sourcing from the market. But otherwise, we are backward integrated. So one or two intermediates we have to import because they are readily available in the market. Those we were buying from the local market as well as importing. But otherwise, majority, it was backward integrated and the Indian sources.

Nagesh Jain — NB Investments — Analyst

Now these new six technicals that you have launched, so there we are not backward integrated, right?

Dheeraj Kumar Jain — Chief Executive Officer

There also we are backward indicated, sir. As I told you that recently we started an intermediate which was being imported — majorly was being imported. So that we started manufacturing. So we are getting backward integration in that. And other two molecules also we are getting backward integration. Our strategy is that way only, sir, that we would like to be backward-integrated company. We do very few products with minus one strategy.

Operator

Thank you. Mr. Nagesh Jain, request you to join the queue for any follow-ups. [Operator Instructions] The next question is from the line of Ankit Gupta from Bamboo Capital. Please go ahead.

Ankit Gupta — Bamboo Capital — Analyst

Thanks for the opportunity, and congratulations for…

Operator

Can you be a bit loud, please?

Ankit Gupta — Bamboo Capital — Analyst

Yeah. Congratulations for a decent set of numbers in tough times. Sir, if you can talk about how has been the realization trend over the past three, four years for some of the key products like Captan, Folpet and Cymoxanil? Let’s say, what were their prices pre-COVID? And how are they currently — how much did they move up in the past one year and has been the price trend over the past six, nine months?

Dheeraj Kumar Jain — Chief Executive Officer

Earlier, the price was very, very stable. During — as compared to last quarter of this financial year ’22, the price has increased by around 8% now for the molecules. Earlier, prices were very stable before COVID.

Ankit Gupta — Bamboo Capital — Analyst

Okay. So there wasn’t any significant increase in prices post-COVID, let’s say, in FY ’21, ’22?

Dheeraj Kumar Jain — Chief Executive Officer

Yeah, yeah.

Ankit Gupta — Bamboo Capital — Analyst

And now, in fact, in this six, nine months, they have increased by 8%?

Dheeraj Kumar Jain — Chief Executive Officer

Yeah, yeah. But correspondingly, raw material cost also been increased by this similar amount.

Satya Prakash Gupta — Chief Financial Officer

More, slightly more.

Dheeraj Kumar Jain — Chief Executive Officer

Slightly more.

Ankit Gupta — Bamboo Capital — Analyst

Sure, sure. And sir, one figure that you mentioned that from the new launch — newly launched seven molecules were expected — we are expecting to generate INR250 crores of revenue in FY ’24. Is that right?

Dheeraj Kumar Jain — Chief Executive Officer

Yes, yes.

Ankit Gupta — Bamboo Capital — Analyst

And how much are these molecules contributing to our sales in nine months?

Dheeraj Kumar Jain — Chief Executive Officer

Nine months, they have contributed around 12%.

Ankit Gupta — Bamboo Capital — Analyst

Sure, sure. And how many molecules are we planning to launch in FY ’24?

Dheeraj Kumar Jain — Chief Executive Officer

FY ’24, sir, we would be launching at least four products.

Ankit Gupta — Bamboo Capital — Analyst

Okay. And this will — this product will also be targeting export markets largely?

Dheeraj Kumar Jain — Chief Executive Officer

These four products would be at least two in the — in our subsidiary and two products in our existing plants.

Ankit Gupta — Bamboo Capital — Analyst

Sure, sure. And sir, the new greenfield capex for which we have got the EC approval, will that be largely focusing on the existing set of molecules or we’ll be introducing new molecules which will be contributing to the revenue from the new plant?

Dheeraj Kumar Jain — Chief Executive Officer

We would be aiming at new molecules, sir. Existing molecules, we have got reasonable capacity here. And we would be there aiming for the new molecules and the new chemistries with bromine and flourine and other process chemistries.

Ankit Gupta — Bamboo Capital — Analyst

Sure, sure. And sir, Sandila plant post this INR70 crores capex, will there be any space left for further capex or like we can just reach around INR1,100 crores kind of revenue from the Sandila plant and now the growth will largely come from the new greenfield capex that we are doing?

Dheeraj Kumar Jain — Chief Executive Officer

Sir, with this expansion, the Sandila plant will be almost full. Maybe very small space for one or two small products, but not very much for any big capacity addition there. And the further expansion will come largely from our new site.

Operator

Thank you. Mr. Ankit Gupta, request you to rejoin the queue for any follow-ups as we have several participants waiting for their turn. Thank you. The next question is from the line of Chintan Mehta from Prudent Broking. Please go ahead.

Chintan Mehta — Prudent Broking Services Private Limited — Analyst

Thank you so much sir for the opportunity. Sir, my question is how much top three product contribute…

Operator

May we request you to please be a bit loud. Your audio is very low.

Chintan Mehta — Prudent Broking Services Private Limited — Analyst

Sure, sir. Sir, how much the top three products contributed in nine month FY ’23 ended, sir?

Dheeraj Kumar Jain — Chief Executive Officer

They contributed around 45% of our turnover.

Chintan Mehta — Prudent Broking Services Private Limited — Analyst

Okay, sir. And is it possible to give a break-up of [Indecipherable] Thyrocare break-up? I mean, how much percentage in total revenue?

Dheeraj Kumar Jain — Chief Executive Officer

Let’s say, fungicide, the top two — out of top three, two our fungicides. Fungicide turnover will be around 25% and the herbicide top turnover will be 20%.

Chintan Mehta — Prudent Broking Services Private Limited — Analyst

Okay. And these are all nine month ended, correct, sir?

Dheeraj Kumar Jain — Chief Executive Officer

Nine months ended.

Chintan Mehta — Prudent Broking Services Private Limited — Analyst

Sure, sir. And sir, what is the volume and value growth for this quarter compared to last year’s same quarter?

Dheeraj Kumar Jain — Chief Executive Officer

Volume has been increased by 8% and price has increased by 8%. Total increase is 16%.

Chintan Mehta — Prudent Broking Services Private Limited — Analyst

Okay. And sir, utilization at the end of nine months, sir, for both technical and formulation?

Dheeraj Kumar Jain — Chief Executive Officer

For technical, it has been around 72%. But formulation has been quite low, maybe around 40% since there is a lot of China inventory in local market. So — and it was oxygen also. So utilization formulation was low.

Chintan Mehta — Prudent Broking Services Private Limited — Analyst

Okay. And sir, since the IPO, we have launched the healthy seven molecules. Sir, any rough number that how much the market size in terms of molecule we have increased?

Dheeraj Kumar Jain — Chief Executive Officer

Market size, one or two are very large molecules. They have very good market size in India. But to quantify, say, they may be having market size of around INR1,000 crores.

Chintan Mehta — Prudent Broking Services Private Limited — Analyst

All seven molecules? All seven new molecules?

Dheeraj Kumar Jain — Chief Executive Officer

All.

Chintan Mehta — Prudent Broking Services Private Limited — Analyst

Okay. And sir, the new product we are targeting, any idea about demand or the realization prices? Are they stable all around?

Dheeraj Kumar Jain — Chief Executive Officer

For this last product we have launched, all the seven new molecules we are talking.

Operator

Thank you. Mr. Mehta, request you to join the queue for any follow-ups. The next question is from the line of Senthil Kumar from Joint Capital Services. Please go ahead.

Senthilkumar Natarajan — Joindre Capital Services — Analyst

Good evening, sir. Am I audible?

Operator

Yes.

Dheeraj Kumar Jain — Chief Executive Officer

Yes, sir.

Senthilkumar Natarajan — Joindre Capital Services — Analyst

Sir, my first question is on revenue mix, sir. actually, in your opening remark, you said like the export revenue share increased to 68% from 49% on a sequential basis. So if I do a math on this, I could find that there is a 45% drop in domestic sales and 20% increase in exports revenue. Even now you have committed like there was a strong demand for both existing and newly launched products. I couldn’t understand. So now what is the reason for this 43% domestic revenue, sir?

Dheeraj Kumar Jain — Chief Executive Officer

Sir, actually, in domestic revenue, what happened, sir, this is a slightly lean season. What happens now the major consumption is in Q2. So Q1 and Q2 sales are a little higher and Q3 slightly it is flat. Number one. So that is why the local sales are slightly less. We are building the inventories for the local sales which we would be selling during the last period of this quarter as well as next quarter.

Senthilkumar Natarajan — Joindre Capital Services — Analyst

And my second question, sir, you just commented like revenue from newly launched products is INR25 crores. So what I’ve done is now, if I reduce the INR25 crores from the revenue of INR217 crores reported in this Q3 FY ’23, I can find that there is only 1% growth in the overall revenue. I just want to know whether — do we see any slowdown in — for the existing product demand?

Dheeraj Kumar Jain — Chief Executive Officer

Even our Q3 financial year ’22 sales, our new products have contributed INR10 crores to INR12 crores sales also. Since we have launched some products in Q2 financial year ’22 only, there was contribution from new products in the last Q3 of financial year ’22 also.

Senthilkumar Natarajan — Joindre Capital Services — Analyst

Okay, okay. So what is the contribution of newly launched product in Q3 FY ’22, sir?

Dheeraj Kumar Jain — Chief Executive Officer

It was around INR12 crores to INR13 crores last year. Now it has increased to INR25 crores.

Senthilkumar Natarajan — Joindre Capital Services — Analyst

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

Operator

Thank you. The next question is from the line of Bhavin Chheda from Enam Holdings. Please go ahead.

Bhavin Chheda — Enam Holdings — Analyst

Yes, sir. You mentioned volume growth of 8% and price growth of 8%. Was this for the first nine months of FY ’23?

Dheeraj Kumar Jain — Chief Executive Officer

No, it was for this quarter as compared to Q3 of financial year ’22.

Bhavin Chheda — Enam Holdings — Analyst

This was for quarter. Okay. And in absolute term, what was the volume number? You said somewhere 3,900 tonnes.

Dheeraj Kumar Jain — Chief Executive Officer

Yeah, yeah, 3,900 tonnes. Sale production is slightly higher.

Bhavin Chheda — Enam Holdings — Analyst

So how much is the production, sir, if you have the number?

Dheeraj Kumar Jain — Chief Executive Officer

It will be around I think 4,100 tonnes.

Bhavin Chheda — Enam Holdings — Analyst

4,100 tonnes. Okay. And do you have nine months number, sir, for production and sales volume and how much was the growth?

Dheeraj Kumar Jain — Chief Executive Officer

Sir, I will — right now, we do not have this nine months production number. We can send you by mail.

Bhavin Chheda — Enam Holdings — Analyst

Sure, sure. And you said new products in first nine months contributed 12% of sales?

Dheeraj Kumar Jain — Chief Executive Officer

Yes, yes.

Bhavin Chheda — Enam Holdings — Analyst

Which would be roughly INR80-odd crores?

Dheeraj Kumar Jain — Chief Executive Officer

Yeah.

Bhavin Chheda — Enam Holdings — Analyst

Okay, okay. And Hamirpur plant, sir, what was the capex number of your spent till date?

Dheeraj Kumar Jain — Chief Executive Officer

We have spent around INR10 crores in Hamirpur project and we are further expecting to spend INR7 crores to INR10 crores in the next two months.

Bhavin Chheda — Enam Holdings — Analyst

Okay. And next year how much will you spend? So next year, by Q4, you will start this plant?

Satya Prakash Gupta — Chief Financial Officer

Yes, at least, one to two products.

Dheeraj Kumar Jain — Chief Executive Officer

Yeah, yeah. We will start in Q4 financial year ’24.

Bhavin Chheda — Enam Holdings — Analyst

Okay. Thank you, sir.

Operator

Thank you. The next question is from the line of Rahul Jain from Credence Wealth. Please go ahead.

Rahul Jain — Credence Wealth Management — Analyst

Thanks for the follow-up. Thanks for the opportunity. Sir, you mentioned the new products and also the new products to be added, which is the number of products next year would be four, and this will come at the new site?

Dheeraj Kumar Jain — Chief Executive Officer

No, not all four will not come into new site. Two will come at least at the new site and two would be in the existing site. Existing, our capex is still continuing. So that capex would result in two more quarters.

Rahul Jain — Credence Wealth Management — Analyst

Sure. And sir, with regards to…

Dheeraj Kumar Jain — Chief Executive Officer

So instead of eight, we would giving nine products from our existing site.

Rahul Jain — Credence Wealth Management — Analyst

Okay, okay. And sir, with regards to customer additions, how has been the customer additions? What are we — how are we trying to add the customers? Any new customers added already or you are quite confident that growth will come in specifically the large MNCs across the globe?

Dheeraj Kumar Jain — Chief Executive Officer

Yeah. We are already working in that direction, sir. And we are adding new customers. We are having discussions with a few U.S. companies and a few Australian companies. So that discussion is already going on. And for the new products, we have some arrangements with the new customers, even with Japanese.

Rahul Jain — Credence Wealth Management — Analyst

And how about the registration of these products in the various territories?

Dheeraj Kumar Jain — Chief Executive Officer

We are already working on those lines. Wherever they require registration, we are giving them all the data required to register. And where we need to register, we are submitting, we are getting the data generated because we require five batch reports. We require physical chemical properties. We require toxicological studies. So the studies are already going on and we will be submitting these for the registration in various countries.

Rahul Jain — Credence Wealth Management — Analyst

Sure. And sir, with regards to this INR1,100 crores of top-line from the existing site next year, two parts to it; one, given that most of it will come from the existing — the old products as well as the new products which we have launched in the last six months to nine months post IPO. And typically, what we understand from your interactions is most of these products have been doing well and are expected to do well and the capex is also almost completed with regards to the existing plant.

As we speak today, given that the raw material costs are coming down, given that the logistic costs are now much more favorable for you, the fuel cost should come down gradually, do we see any risk to push the top-line which we are projecting? What can that risk be, number one? And number two, what kind of EBITDA margins do you visualize for this kind of top-line, which is around INR1,000 crores to INR1,100 crores?

Dheeraj Kumar Jain — Chief Executive Officer

EBITDA margin, we are projecting it next year is between 23% to 25%. And since our product had very stable pricing environment, presence of China is very less. So we do not see much downward risk due to price reduction. But even our customer, our buyers, they are not able to increase price very much. So a stable kind of environment we are projecting as far as pricing is concerned.

Operator

Thank you. Rahul, request you to join the queue for any follow-ups. [Operator Instructions] We have the next question from the line of Sharad Ratna Kumar from [Speech Overlap]. Please go ahead.

Unidentified Participant — — Analyst

Hello.

Operator

Yes.

Unidentified Participant — — Analyst

Thanks for taking my question, sir.

Dheeraj Kumar Jain — Chief Executive Officer

Thank you.

Unidentified Participant — — Analyst

Good evening. Sir, my question was regarding the Hamirpur capacity. So if I understand correctly, we are predicting — projecting INR100 crores in capex over the next four years. And from the environment report, what I see is technicals is around 3,600 tonnes per annum and formulations around 29,200 tonnes per annum. Now are we looking to commission this entire facility in this four year period?

Dheeraj Kumar Jain — Chief Executive Officer

Sir, this is the clearance what we have got from the Ministry of Environment. We — what we have applied for slightly higher capacity so that we don’t have to go to them again and again. That is number one. And we would be — as told earlier, we would be building that in blocks, and we can go up to this capacity. That is the reasonable estimate, but we will see over the years how we add the capacities. We are projecting about INR100 crores per annum for the coming four years. And with this capex, whatever capacity we can build up, we will try to build as much as possible. But to be on the safer side, we have taken a safe capacity permission from Ministry of Environment.

Unidentified Participant — — Analyst

Understood, sir. With this INR100 crores over the next four years, each year, what is the kind of capacity that we are looking to implement?

Dheeraj Kumar Jain — Chief Executive Officer

It is difficult to tell, because what happens, sir, some products, they are slightly higher in value. So the capacity would be slightly limited. And some products are slightly low value products, so there, the capacity could be a little higher. So exactly telling the capacity, what we would be building is slightly difficult at this stage. Maybe down one year, one and a half years, we will be more definite on this.

Unidentified Participant — — Analyst

Understood, sir. We’ll wait for it. Thank you so much, sir. I will fall back in the queue.

Dheeraj Kumar Jain — Chief Executive Officer

Thank you, sir. Thank you.

Operator

Thank you. The next question is from the line of Prateek Singhania from SageOne Investments. Please go ahead.

Prateek Singhania — SageOne Investments — Analyst

Sir, I want to know the realization for Folpet and Cartap for FY ’21 and ’22? And what is the price as of now for nine months as well as the Q3?

Dheeraj Kumar Jain — Chief Executive Officer

This is slightly confidential, sir. It will be difficult for me to tell the exact number on this. And Cartap, we are not producing. We are producing — we are not producing Cartap. We are producing Folpet, but not Cartap.

Prateek Singhania — SageOne Investments — Analyst

Okay. But sir, has there been a substantial drop in the realization? Is that affecting our overall gross margin?

Dheeraj Kumar Jain — Chief Executive Officer

No, there is no reduction in the realization of even Folpet, that much I can tell.

Prateek Singhania — SageOne Investments — Analyst

Okay. So the realization stays status quo as compare to…

Dheeraj Kumar Jain — Chief Executive Officer

That stays. Yes, sir.

Prateek Singhania — SageOne Investments — Analyst

And sir, with respect to your like large players like UPL and Corteva, the commentaries have been very positive. So why are we not being able to pass on the cost if the demand from those guys are much strong?

Dheeraj Kumar Jain — Chief Executive Officer

Sir, actually, the ultimate usage price in the market, that doesn’t get absorbed. Probably, that is why we are not able to pass on the complete cost increase. Though we have an arrangements with the companies and the raw material costs we are able to pass on, but the overall manufacturing cost and the energy cost, that becomes difficult for us to pass on that is why there is some impact on us.

Prateek Singhania — SageOne Investments — Analyst

Okay. And sir, with respect to our current location, like since coal availability is a challenging situation for us, then why not shift or like setup new plant at a much better location which are much more friendly and access to coals are much easier?

Dheeraj Kumar Jain — Chief Executive Officer

Sir, for your information, I would like to say that we are not using coal at all even in our existing plants. We are using a much greener energy source that is rice husk and which is slightly cheaper than coal. And the rice husk is available plenty in this area because UP is producing lot of rice. So rice husk is available in the plenty. Though the price are — even the rice husk has increased over the period now, but the availability is there. And it is a green initiative by the company not to use any fossil fuel. So we don’t use any coal at all.

Prateek Singhania — SageOne Investments — Analyst

Okay. So 100% of our requirement is met through rice husk in terms of power generation?

Dheeraj Kumar Jain — Chief Executive Officer

Not power generation. It is for the other inventory requirement. For example, steam generation, hot water generation, hot air generation, all those things. Power, of course, we buy from the electricity board.

Prateek Singhania — SageOne Investments — Analyst

Sure. Okay, sir. Thank you.

Dheeraj Kumar Jain — Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from the line of Yogansh Jeswani from Mittal Analytics. Please go ahead.

Yogansh Jeswani — Mittal Analytics — Analyst

Hi, sir, Thanks for the opportunity, and congratulations on a decent set of results. Most of the questions have been answered, sir. Just couple of follow-ups I’ll have. So inventory you mentioned that the high cost inventory will go down in coming quarters in Q4 and specifically in Q1. But could you just share the December inventory closing value? What was it, sir?

Dheeraj Kumar Jain — Chief Executive Officer

Yoganshji, in absolute number, it is around the same as in Q2 current September by around INR225 crores.

Yogansh Jeswani — Mittal Analytics — Analyst

Okay. And this we expect to bring down to what level, sir, by year end? I mean, the reason I’m asking is because our inventory days overall has gone up, not just the absolute amount. So overall, what is the trajectory that you want to bring down it to by year end?

Dheeraj Kumar Jain — Chief Executive Officer

By year end, it will be reduced by at least INR25 crores.

Yogansh Jeswani — Mittal Analytics — Analyst

Okay. So major changes should come in next financial year then, the normalization basically?

Dheeraj Kumar Jain — Chief Executive Officer

Yeah, yeah. Normalization to earlier inventory level will not be there since now we are producing some products which had very seasonal demand. Earlier, our products were they were being sold, say, in 10 to 11 months entire year. But a few of our new products, they are specifically for kharif season. They are being moleculed. So we have to build up a lot of inventory in anticipation of next season. So inventory level will not go down to earlier levels, but it will rationalize from here.

Yogansh Jeswani — Mittal Analytics — Analyst

Okay. So now going forward with these new products, sir, our Q4 and Q1 will be the quarters with heavier sales?

Dheeraj Kumar Jain — Chief Executive Officer

Yeah, yeah. This quarter had heavier sales.

Yogansh Jeswani — Mittal Analytics — Analyst

Okay. Got it. And sir, the new product that we mentioned, the contribution from which we are expecting 300 tonnes. So what is the kind of price point for this product, if you could share?

Dheeraj Kumar Jain — Chief Executive Officer

The prices vary from, say, INR600 per kg to — new product. Are you asking for the new herbicide, what we have introduced or our overall order range?

Yogansh Jeswani — Mittal Analytics — Analyst

Sir, one product you mentioned that we have launched for 300 tonnes in Q3.

Dheeraj Kumar Jain — Chief Executive Officer

Yeah, yeah. That is a slightly high value products ranging from about almost about INR3,500 a kg.

Operator

Thank you. Ladies and gentlemen, due to time constraints, that would be our last question for today. I now hand the conference over to Mr. D.K. Jain, CEO, for closing comments. Thank you. And over to you, sir.

Dheeraj Kumar Jain — Chief Executive Officer

We thank you very much for taking out your time to attend this call, and wish you all the best and have a good evening.

Operator

[Operator Closing Remarks]