PI Industries Ltd (PIIND) Q3 FY22 Earnings Concall Transcript

PI Industries Ltd (NSE: PIIND) Q3 FY22 Earnings Concall dated Feb. 04, 2022

Corporate Participants:

Nishid Solanki — Investor Relations

Mr. Mayank Singhal — Vice Chairman and Managing Director

Mr. Manikantan Viswanathan — Chief Finance Officer

Mr. Rajnish Sarna — Joint. Managing Director

Mr. Prashant Hegde — Chief Executive Officer – AgChem Brands

Analysts:

Ankur Periwal — Axis Capital — Analyst

Bhavesh Jain — Kotak Investments — Analyst

Vishnu Kumar — Spark Capital — Analyst

Rohit Nagraj — Emkay Global — Analyst

Madanagopal Ramu — Sundaram Assets Limited — Analyst

Aditya Jhawar — Investec Capital — Analyst

Abhijit Akella — IIFL Securities — Analyst

Bharat Shah — ASK Investment Managers — Analyst

Tejas Sheth — Nippon India — Analyst

Khushi Doshi — Axanoun Investment Management — Analyst

Sumant Kumar — Motilal Oswal — Analyst

Surya Patra — PhillipCapital — Analyst

Rohan Gupta — Edelweiss — Analyst

S. Ramesh — Nirmal Bang — Analyst

Varshit Shah — Veto Capital — Analyst

Dhavan Shah — ICICI Securities — Analyst

Manish Mahawar — Antique Stockbroking — Analyst

Deepak Chitroda — PhillipCapital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Q3 FY ’22 Earnings Conference Call of PI Industries Limited. [Operator Instructions]

I now hand the conference over to Mr. Nishid Solanki from CDR India. Thank you, and over to you, sir.

Nishid Solanki — Investor Relations

Thank you. Good afternoon, everyone, and thank you for joining us on PI Industries Q3 FY ’22 Earnings Conference Call. Today, we are joined by senior members of the management team, including Mr. Mayank Singhal, Executive Vice Chairman and Managing Director; Mr. Rajnish Sarna, Joint Managing Director; and Mr. Manikantan Viswanathan, Chief Financial Officer. We also have with us Mr. Prashant Hegde, CEO of Domestic Agri Inputs; and Dr. Atul Gupta, CEO of CSM Exports. We will begin the call with key perspectives from Mr. Singhal. Thereafter, we will have Mr. Manikantan sharing his views on the financial performance of the company. After that, the forum will be open for question-and-answer session.

Before we begin, I would like to underline that certain statements made on the conference call today may be forward-looking in nature, and a disclaimer to this effect has been included in the investor presentation shared with you earlier and also available on stock exchange website.

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

Mr. Mayank Singhal — Vice Chairman and Managing Director

Yes. So thank you, Nishid. Welcome, everybody, and thank you for the participation in the call today. I wish you all a very happy 2022. I hope the Omicron challenges and-the-rest and we are grateful to our front-line workers for their efforts in this pandemic. I’m also pleased to inform that PI has achieved an all-time high revenue and EBITDA in this quarter with the revenue coming at 17% while EBITDA growing at 8% and PAT growth of 14%. This expansion came in despite of a high base of last year when both the Domestic and Exports have rising trends of input costs.

The Domestic growth was by 8%, while the Exports were a robust 19% in the quarter under review. We are tagged in the front line since we have the edge leading technology of complex chemistry. Our team are engaged and discovering better and more efficient pathways to commercial molecules for global arena. Innovators across the world acknowledges and we have a number of inquiries from existing and potential clients and partners and arising market leaders. Transactions in new inquiries has continued and significant number of inquiries are coming from non-ag chem space, too, hence, given the opportunity to build its next core compete in that area.

We have acquired more than eight customers — new customers during the nine months, and there’s a rich pipeline of more than 40 products, which are at different stages being evaluated. And more interestingly, more than 20% of these are non-ag chem. We have a target to commercialize three new molecules in Q4 in addition to four molecules already commercialized by December, a total of eight for the year. We have commissioned new complex building block with the composition of flow, and back process of monomethylhydrazine, MMH.

This is an extremely complex chemistry and challenging with technology transfers and capabilities, and we are scaling our production and our team is one of the few in the world who have been able to build this production capability and demonstrate commercial production. Another great achievement that we are a part of. Our Domestic performance for the quarter was favored by agro-chem revenue conditions supported by price hikes effected by key products. We undertook successful launches of one of our new insecticides for rice and two specialty fungicides focused on horticulture and rice.

We’ve also successfully launched a number of new brands in the horticulture segment with Jivagro, which continues to enjoy strong savings, which, with our key product positioning, well as category leaders. Moreover, our 15 to 18 products are in different stages of development and are going to get into registration. The idea is to further strengthen our market lines in the coming period, and some of our niche — novel introduction continue to perform ahead of our expectations. Let me take a few of the examples in that. I’m happy to report that AWKIRA, the new herbicide, continues to grow from strength to strength, and the key will increase threefold in this year. In fact, with AWKIRA, we’re changing the habits of the farmer.

Again, a strong concept selling that’s been done for the first time ever in that segment as a pre-emergent herbicide usage. The other interesting is launch of pheromone-based products, PB Knot, for the menace of the of pest of pink boll worm is another sustainable solution, and we are working with public-private partnerships to answer the current needs of this and have been able to demonstrate this performance, which has given excellent results over five different states in the country. Once again, affording to specialty biological product, first of its kind, which has now been launched into India in the grape segment.

It has given a great innovative product to the market in the grape segment, which is safe toward the disease management for, again, one of the challenging pests, which is the powdery mildew disease and enhance the quality, also enhances the quality in the luster and the shine of the product. So another great three launches, which PI has brought some new innovative concepts into the ag market, which we expect over time to further scale up and to demonstrate our capability as a differentiated player in the ag segment. We continue to strengthen our marketing approach submitting has already a strong pipeline of brands working in close quarters, especially dedicated personnel in pharma to announce through better use technology and modern best practices.

Our business outlook remains robust, and we are very confident of achieving — building the growth guidance for the current financials. I would also highlight that we have refreshed the PI compass. We set ourselves the direction and a mission to further our growth. We set the purpose of reimagining a healthier planet. And our mission is to lead with science and technology and human ingenuity to address related nutrition health needs of the planet. We are aligning the organization across the various levels in order to achieve and drive the PI compass. Our diversification into adjacencies through inorganic routes are top agenda.

Apart from technology scale-ups, we are evaluating various M&A opportunities, both India and globally, to zero down on a few which meet the objective of creating a sustainable difference in value proposition in line with our purpose, vision and the values by which we want to run the organization. We have elevated our homegrown talents and leadership in alignment to meet the delivering development agenda along in terms of our purpose and vision, both in the CMS and the Domestic business. This rewards long-term business, contribution also helps drive the culture, medical and across all levels.

Last, but not the least, we are proud of our investing customer accolades. As announced earlier, PI emerged as the top quartile company in the very first S&P Global Sustainability Assessment, with an 82 percentile industry ranking. This ranking with a Gold Star rating with the 96% high to rating of EcoVadis, a high score under the independent Together for Sustainability, the TfS assessment for global customer clearly demonstrates and predicts our ESG focus. The budget space of Honorable Minister, Financial Minister, on the 1st of February and this is a series of programs for benefit of agriculture and chemical export sector.

We believe these long-term policy initiatives by the government of India shall further boost opportunities in the name of agriculture, agri-input and specialty chemical manufacturing in India, the health companies like PI and their further growth momentum as we move. With that, let me first thank all our stakeholders for their contribution for this quarter and wish you good health and stay safe.

And with this, would like to now hand over to our CFO, Manikantan, to share his highlights of our financial performance. And once again, thank you all for coming to participate on this call.

Mr. Manikantan Viswanathan — Chief Finance Officer

Thank you, Mr. Singhal. Good afternoon, everyone, and thank you for joining us on the call today. I’ll be summarizing the financial highlights of the company for the third quarter ended 31st December 2021. Please note that all comparisons are on a year-on-year basis and refer to consolidated performance. During Q3 FY ’22, we reported all-time revenues of INR1,356 crores, a growth of 17% over the same period last year. This was driven by solid growth in Export revenues by 19% to INR1,076 crores; an 8% gain in Domestic revenues, to INR280 crores.

I would like to highlight here that we have grown on a high base of last year where Domestic revenues grew by 26% and Export revenues increased by 40% in Q3 FY ’21 over the previous period year-on-year. The trend of elevated input cost continued during the quarter, although we have effected partial pass-through by increasing product prices, both in Exports as well as in Domestic markets. Full impact of price hikes will be reflected in the coming quarters. Our gross margin contracted by 49 basis points in Q3 FY ’22 to 46% due to lower Export incentives and partial cost pass-through, among others, which negated the impact of favorable product mix. EBITDA increased by 8% to a record INR297 crores.

The margin moderation came in due to increased overheads by 24%, mainly attributed to sharp increase in fuel and other related utilities costs, logistics costs and one-off expenses pertaining to strategic initiatives. These one-off expenses are nonrecurring in nature, and we expect our price hike to partly mitigate the cost increase in the coming quarters. Profit after tax improved by 14% to INR223 crores, in line with our planned effective tax rate.

Our balance sheet further strengthened during the quarter. Net sales-to-fixed assets ratio improved to 2.07 from 1.89 in March 2021. While total capex for YTM FY ’22 period stood at INR228 crores. Inventory level was maintained at the similar level from the last quarter to our supply chain disruption and meet customer supply schedules and continued operations. Company maintained its strong liquidity position with surplus cash and net of INR2,078 crores, including QIP proceeds. That concludes my opening remarks.

I will now request the moderator to open the forum for Q&A. Thank you.

Questions and Answers:

Operator

Thank you very much, sir. [Operator Instructions] We’ll take a first question from the line of Ankur Periwal from Axis Capital. Please go ahead.

Ankur Periwal — Axis Capital — Analyst

Yes. Hi, Sir. Thanks for the opportunity. First question on the CSM side, decent growth given the high base as well on a year-on-year basis. But please correct me if I’m wrong, probably this will be the highest new product launch for us in this financial year and considering the new client adds, which you highlighted as well. Your thoughts on the incremental growth maybe from a medium-term perspective, how should we look at that number?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Yes. So thanks. I think when we start looking at the business since we’re already at the high base and looking at the growth, what is the good part is we’ve seen a lot of positivity coming in terms of the demand cycle in this area and you can see it from this. In the coming year, very clearly, we will be further looking to enhance our capacities in terms of both bringing about — by adding capacity in the existing facilities and also going ahead to probably start building the base in other entities.

We see a project trajectory in terms of demand, both in terms of the existing business, in terms of new businesses, which are coming. So PI’s approach on what is ahead, investing ahead of time, is something that is probably going to drive our investments going to the next year, which should give a good trajectory going into the future. As you would appreciate that we are always focused on the mill-generation products and we are seeing some of the new AIs getting included in the demand cycle in our commercialization initial phase, which obviously would ramp up in the time to come.

Ankur Periwal — Axis Capital — Analyst

Sure. And just a follow-up there. These new product launches, both for, let’s say, YTD FY ’22 as well as what we saw in FY ’21. What should be the ideal time frame for us to see a scale-up there? As in this will be contributing significantly to FY ’23 revenues or ’24?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Well, as you know, the new products would take usually three to five years before the tech maturity. And some of them are interestingly also in the area of the electronic chemicals as we diversified our activities into different fine chemical areas. So the maturity of these would be probably longer than five. But yes, you would see a good substantial volume in three to five years, yes.

Ankur Periwal — Axis Capital — Analyst

Sure. Yes. And a second question on the working capital side. I take your point in terms of higher working capital because of the inventory side. But even the receivables saw a slight uptick there. Should we read too much into it or — because the receivable days have been steady at around 70-odd days since last couple of quarters. What could be a new — a number there to watch out for?

Mr. Mayank Singhal — Vice Chairman and Managing Director

I think that’s a pretty steady number to work, but if I was to look at the areas of improvement over last year, as you would see. But obviously, inventory cycles are high and that also goes to say which is a great — our objective between customer satisfaction, we have been able to deliver more than 98% of our demands to our customers on time even with the challenges of COVID over the last two years and with supply chain disruptions.

So the inventory management optimization is done in a way to make sure that we can continue to smoothly supply product to our customer while augmenting our capacity, yes. And the challenge — last year, this could be a challenging play. But internally, the company is also looking to the new normal so so how do we optimize here further. That’s the approach the organization is taking.

Ankur Periwal — Axis Capital — Analyst

Sure. My question was more specifically on the receivables side. We were at around 80, 85 days earlier and we have seen that number coming down to around 60 to 70. But in the nine months, we are going back to that 70-plus days on the receivables side. So is that the new number — new normal that we should consider?

Mr. Manikantan Viswanathan — Chief Finance Officer

Yes. I just wanted to clarify. Last year, DSO was around 60-and-odd days in 31st of December ’20. Right now, we are in 71 days. This is where we are currently, as explained. And going forward, obviously, these things slightly fluctuate, but it will be in the same level of 69 to 70 days, it would be.

Ankur Periwal — Axis Capital — Analyst

Okay. Thank you and all the best. Thank you.

Mr. Rajnish Sarna — Joint. Managing Director

The other factor there, if you assume this, Ankur, on a blended basis is some changes in business composition. So because the blended revenue is Export and Domestic, and as you know, that the receivables cycle in Exports is shorter than the Domestic. Now since the share of Exports is more in the current year vis-a-vis last year, you see this thing.

Ankur Periwal — Axis Capital — Analyst

Sure, makes sense. Thanks a lot for that. Thank you.

Operator

Thank you. We’ll take the next question from the line of Bhavesh Jain from Kotak Investments. Please go ahead.

Bhavesh Jain — Kotak Investments — Analyst

Yes. Thank you for giving this opportunity. Sir, first question on this agro-chem CSM. How do we see the growth over medium to long term, considering few of our Q molecules are going off-patent over next two to three years?

Mr. Mayank Singhal — Vice Chairman and Managing Director

So I mean, obviously, there has been a certain challenge in the regulatory area for getting new registrations. As you would see here, we will also be launching four new products coming — in the coming year. Are you talking about CSM or you’re talking about AgChem, sorry, Domestic.

Bhavesh Jain — Kotak Investments — Analyst

I think I’m talking about Export CSM.

Mr. Mayank Singhal — Vice Chairman and Managing Director

Oh, okay. So I mean, in January — for January, you see the contract manufacturing business is always working on the area of our cost benefit at arbitrage. So there is no pressure on the manufacturing costs, which would be given from that. On the other hand, as genericization happened, then you would have seen that trading molecule. The key molecule inventor continues to hold its premium market share in price and continue to grow the market share

So as you would see, we see this not as a pressure at least for the next three to four, five years for these molecules because the genericization cycle in some of the geographies in time and some of the geographies which are coming also out of data protection, which further continues to do that. On the other hand, our own ability with experience in terms of cost efficiency and 10, 15 years of this molecule has been in manufacturing, I’m pretty confident that we are the best cost structure in the world in some of these products as we continue ahead.

Bhavesh Jain — Kotak Investments — Analyst

Okay. Okay. And the second question on this pharma CSM peak, post Ind-Swift, are we actively looking for more opportunity? and whether we can build this business organically and scale up much faster? Or inorganic will be an imperative to scale up this pharma CSM business much faster?

Mr. Mayank Singhal — Vice Chairman and Managing Director

So definitely, we are looking. There’s no questions on that. I think now the hunger has got even bigger because we need to catch up with time. So we will be looking at this place in both organic and inorganic.

On the other hand, I must mention that while we will continue to invest to look at the areas in inorganic opportunity, we have got a team in R&D with dedicated resources and then building our R&D capabilities further in terms of infrastructure, which have been worked on certain identified products, which are the non-GMP space.

And on the other hand, we should be also augmenting one of the existing assets to do the pharma intermediates in this coming year so that we continue to do organic. But as you would appreciate, we want to do something substantial and pretty quick. Organic, the pace is the way it is, which is continuing, but the inorganic action is what we want to accelerate the process. And more so, the total opportunity that we’re trying to achieve, what we’re trying to do well there, but in the fastest pace with us given the time dimension, which is last but — so we’re looking at opportunities in that line.

Bhavesh Jain — Kotak Investments — Analyst

Okay, sir, I have more question, I will come back in queue. Thank you. Thanks a lot.

Operator

Thank you. Our next question is from the line of Vishnu Kumar from Spark Capital. Please go ahead.

Vishnu Kumar — Spark Capital — Analyst

Good afternoon and thanks for your question. On the pharma inorganic acquisition, would there be an outer time line, by which we can expect you to close something, something like two quarters, three quarters? Is there something in outer time line that at least you can give us?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Thank you for this question. I would like to do that as soon as possible. So we are on — we’re looking, but we’ve got to make sure that we get the right bite, right?

Vishnu Kumar — Spark Capital — Analyst

Sorry?

Mr. Mayank Singhal — Vice Chairman and Managing Director

I’d like to get some action moving obviously within the year.

Mr. Manikantan Viswanathan — Chief Finance Officer

In next few quarters.

Mr. Mayank Singhal — Vice Chairman and Managing Director

In next few quarters, Vishnu.

Vishnu Kumar — Spark Capital — Analyst

I’m sorry, sir. I’m not able to hear you clearly.

Mr. Mayank Singhal — Vice Chairman and Managing Director

I said we would like to move this as soon as possible as of yesterday. So obviously, we’re looking on an aggressive pace, and we would like to have something moving in the next few quarters or so.

Vishnu Kumar — Spark Capital — Analyst

Got it, sir. And sir, just wanted to some thoughts on your — you mentioned MMH. And also — you also mentioned about some non-agro product that you are looking into. Firstly, on MMH, wanted to understand what is the opportunity? What is the growth potential? If you could give us some insights on it? And secondly, on the non-agro products, when we are scaling up, would it require additional capex? Or how should we look at the capex and growth trajectory on this side?

Mr. Mayank Singhal — Vice Chairman and Managing Director

You see, MMH, in any case, is a backward integration strategy and we are also looking at certain core intermediate blocks, which is further giving us the cost arbitrage and a risk mitigation plan backed with the opportunity to have certain revenues in certain intermediate blocks. But the interesting fact is it’s unique of its kind in terms of the molecule. The process technology that we work is a combination of flow and backstroke.

It gives us a new capability enhancement of dealing with hazardous products and science. In regards to the — obviously, the capex, as you know, we have put some aggressive capital over the last two years. And as you’ve seen, that you also looked at 15% to 20% capacity enhancement through operational excellence and efficiency. The footprint of the MMH is 30% bigger than any of the other entities. So this revenue growth plan is going to be driven by that.

But looking at what we see coming in, we are looking at two prong investments, which will probably come to you post next quarter as when budgets and all gets approved that we’re looking to further get into, putting up another entity, which — and on the other hand, we’re also looking to augment one of our assets. And we’ll upgrade it to the pharma intermediate space so that we have the organic play, which we are planning to do into our operation by the end of the year.

Vishnu Kumar — Spark Capital — Analyst

Understood. This pharma, organically, what is the revenue potential that we could possibly reach by next year or maybe one or two years that we are currently working on?

Mr. Mayank Singhal — Vice Chairman and Managing Director

So that would be too early for me to comment. We are at different stages of valuation, right? So we are maturing and working on this. And then we will come back with a better understanding in the next couple of quarters.

Vishnu Kumar — Spark Capital — Analyst

Got it, sir. Thank you. And one suggestion, the voice is very — it’s not clear. Maybe I think you’re speaking in the speaker. If you could possibly change it, it would be useful. Thank you.

Mr. Mayank Singhal — Vice Chairman and Managing Director

It’s better now?

Vishnu Kumar — Spark Capital — Analyst

Somewhat, but better — but it could be much better.

Operator

Thank you. Our next question is from the line of Rohit Nagraj from Emkay Global. Please go ahead.

Rohit Nagraj — Emkay Global — Analyst

Yeah. Thanks for the opportunity. Sir, we have mentioned that we have partially passed on the price increases. Now given the cost pressures that currently we are facing, we will be passing it on in Q4 as well. But in case of retreating of the input prices, what generally happens because there is a lag in terms of passing on the price — input cost increases. But whenever the input costs again decreased, then how does it work for us? Thank you.

Mr. Mayank Singhal — Vice Chairman and Managing Director

Well, it’s the same cycle. It works one way or the other way. But typically, we have the inventories in time to which these orders are committed, so that’s less of an insight and the input. So that’s kind of works out in the same way.

Rohit Nagraj — Emkay Global — Analyst

Right, right. And so generally, it is about of three months in terms of the lag effect that comes into play either side?

Mr. Mayank Singhal — Vice Chairman and Managing Director

It takes — yes, well, it depends on the product and offer. Yes, a quarter or so. It depends on — also depends on the inventory levels. Yes, typically, that’s the average time you can look at. Yes.

Rohit Nagraj — Emkay Global — Analyst

Sir, right sir. Thanks. The second question is on the balance sheet. So we have borrowings of close to about INR300 crores, and we have a cash surplus of about INR2,300 crores. So any specific reason to keep those borrowings on the books?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Mani?

Mr. Manikantan Viswanathan — Chief Finance Officer

Yeah. Thank you. It’s on ECB, which we have taken up a couple of years back where that is an average maturity of five years. It’s continuing in the books. It is beneficial comparing the rate which we have taken at that time. So we also evaluated the same thing and I find that it is — we want to keep the ECB on our books.

Rohit Nagraj — Emkay Global — Analyst

Right sir, got it. Thanks a lot and best of luck sir.

Operator

Thank you. We’ll take our next question from the line of Madanagopal Ramu from Sundaram Assets Limited. Please go ahead.

Madanagopal Ramu — Sundaram Assets Limited — Analyst

Good afternoon sir, and congratulations for a very good show on the CSM business. Sir, you mentioned on the MMH capability coming in. If I understand, it is going to help us to become more cost competitive for scaling up the existing products? Or is it improving our capability to, say, synthesize more new molecules?

Mr. Mayank Singhal — Vice Chairman and Managing Director

It does both, to be honest.

Madanagopal Ramu — Sundaram Assets Limited — Analyst

Okay. So benefits of this are likely to come in the medium term? Or we have to wait for realistically few years?

Mr. Mayank Singhal — Vice Chairman and Managing Director

This is not going to give us revenue from MMH. We are looking to get revenue from the products that we have in the pipe.

Madanagopal Ramu — Sundaram Assets Limited — Analyst

Yeah. That’s what I’m asking. So it’s in the molecules already commercialized we’ll see the benefits of this coming through?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Some of them and some to be, okay?

Madanagopal Ramu — Sundaram Assets Limited — Analyst

And can you also mentioned about — yeah.

Mr. Mayank Singhal — Vice Chairman and Managing Director

Apart from cost, this also derisk the availability of materials on time because — so far, this was being imported mainly from China, okay. And as you know, given the current scenario, it is a strategic move to derisk from that source.

Madanagopal Ramu — Sundaram Assets Limited — Analyst

Okay, okay, okay. And the second question I had was you also mentioned about the flow chemistry getting commercialized. Can you elaborate a bit on what that would enable us in terms of scaling up the existing molecules?

Mr. Mayank Singhal — Vice Chairman and Managing Director

You mean flow chemistry, pardon?

Madanagopal Ramu — Sundaram Assets Limited — Analyst

You also mentioned about the flow chemistry getting commissioned — commercialized this year. What kind of advantages that will throw us?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Yeah. The flow chemistry is a capability development. It is capable of developing the organization, which will look at the asset structure in a different way. And yes — and we will become — we’re looking to commercialize one of these areas and that gives us the confidence to look at a different ways to do better return on assets with time.

Mr. Rajnish Sarna — Joint. Managing Director

So basically, this will help in two ways. One is that this will dramatically reduce the plant footprint, which means that the capital efficiency, which is the key objective, long-term objective of us in this business, that will be gladly achieved. And then apart from capital efficiency, I mean even the cost of production improvement, cycle improvement, all of those benefits, safety and — also will be achieved.

Madanagopal Ramu — Sundaram Assets Limited — Analyst

Basically, it leads to enhancement of capacity in the existing facilities?

Mr. Rajnish Sarna — Joint. Managing Director

Capacity, cost efficiency and also safety, all three, four objectives, yes.

Madanagopal Ramu — Sundaram Assets Limited — Analyst

Okay. Sir, can you quote us the capex for the current year? And also what kind of capex budgeted for the next year if you can guide us on this?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Well, we’re not disclosing the capex for next year. But Mani, for this year, can you please?

Mr. Manikantan Viswanathan — Chief Finance Officer

Capex of INR228 crores up till now. And we — as we spoke in the last quarter call, around INR300 crores to INR350 crores will be part of our capex for the year.

Madanagopal Ramu — Sundaram Assets Limited — Analyst

Okay. Thank you so much.

Mr. Rajnish Sarna — Joint. Managing Director

And next year’s capex plans are still in discretion in the making because there are several factors, including the pipeline, including some of the — in our opportunities that we are evaluating. So I mean the finalization of next year’s capex will only happen by end of this quarter.

Madanagopal Ramu — Sundaram Assets Limited — Analyst

Sure. Thank you.

Operator

Our next question is from the line of Aditya Jhawar from Investec Capital. Please go ahead.

Aditya Jhawar — Investec Capital — Analyst

Yeah. Thanks for the opportunity. Congrats for reporting strong growth in CSM. Questions on capex, which got partly answered, but one thing just wanted to understand that organically for us if you have to think about capex for 2023, 2024, in the order of magnitude, could it be 20%, 30% higher or much higher than that? Any broad sense on capex for 2023, 2024?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Es. If you were to look at that, but at the same time, I want to highlight that we also work on technologies to improving asset utilization as you’ve already seen this year. We have other plans to do that. Following that, we are putting some of the flow areas that will work, so that is why I think what Rajnish mentioned earlier, we’re still looking at the technology and balancing between risk and rewards and putting up the capex plan.

But clearly, we see a positive trajectory in looking at the capex, the funding, because we are seeing trajectory in demand. And as you would appreciate, that over the last two years, we had aggressively put in capex because we are typically are building capacity for demand. So I think that what’s supporting us through this process. Yes?

Aditya Jhawar — Investec Capital — Analyst

That’s encouraging to hear. So broadly, if we can get a sense that what is line of sight of improvement in asset terms that we can expect in the next two years by so many projects that we are doing? How much upside we can see from the asset terms occurring in the next two years?

Mr. Mayank Singhal — Vice Chairman and Managing Director

This is, again, a chicken and egg story, to be very honest, right now because one side if we are getting inquiries. Well, sometimes in this business you can’t build an asset just for the revenue. We’ll have to build capacity based for a three- to four-year visibility, right? So the investments sometimes go upfront when you get those peaks and troughs. But obviously, the objective is to improve this efficiency. But in the next two years, looking at what we see in terms of surge in demand in terms of capacities we may build, I would see margin improvement here not something substantial to be really taking down. Yes?

Mr. Rajnish Sarna — Joint. Managing Director

We have seen some improvement in this year, in this quarter also, as you have seen. And we are confident that while, yes, on both sides — on one side, commercialization of new projects happening, building up new capacity will also happen; and on the other side, we are also kind of implementing some of these technologies to improve the efficiency plan and throughput. So combined impact will come. Difficult to quantify that as of now, but the direction is very clear: that capital efficiency is gradually going to improve.

Aditya Jhawar — Investec Capital — Analyst

Yes. Okay. The final question. If you have to break the current capex, that is about — for FY 2022, that is about INR350 crores, into the maintenance capex, the capex for backward integration and group capex, roughly what could be the breakup?

Mr. Rajnish Sarna — Joint. Managing Director

Mani, you would have that?

Mr. Manikantan Viswanathan — Chief Finance Officer

Not as entirely and I would come back. Normally, we don’t give such breakup on the capex plan.

Aditya Jhawar — Investec Capital — Analyst

Fair enough. Just one — just one part that just if you can give what could be the capex for the backward integration. That would be sufficient.

Mr. Rajnish Sarna — Joint. Managing Director

Yeah. That is not significant group. Some part has already come earlier, some part has come within this quarter. So I think not more than INR60 crores, INR70 crores or something.

Aditya Jhawar — Investec Capital — Analyst

INR70 for FY ’22?

Mr. Rajnish Sarna — Joint. Managing Director

Yes.

Operator

[Operator Instructions] Our next question is from the line of Abhijit Akella from IIFL Securities. Please go ahead.

Abhijit Akella — IIFL Securities — Analyst

Just a couple of clarifications. One is, if it’s possible to share the Isagro export revenues for this quarter and for the nine months that would be helpful. Thanks.

Mr. Rajnish Sarna — Joint. Managing Director

Mani, you would have that? Or you will share both — separately, Isagro?

Mr. Manikantan Viswanathan — Chief Finance Officer

Some Export revenues, we had shared separately, please.

Abhijit Akella — IIFL Securities — Analyst

Okay. Thank you. The other thing was just to confirm that we’ve talked about this 20% kind of CSM growth target for the next few years with good visibility. So are we still on track for that? And on the Domestic side, what kind of growth could we expect for next year? And also, if you could just comment on the margins. Is it possible that we could see a recovery next year after a low base of this year?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Yeah. I mean as we projected, the growth rates are looking to be in the same direction. And obviously, as we’ll also track up the growth rate as we expect it to do far better than what we’ve had based on the launches of products and new products coming to registration, we see good year moving forward.

Abhijit Akella — IIFL Securities — Analyst

One last thing. Ind-Swift sometime back in December put out an announcement saying that apparently PI has approached the commercial court at Gurugram for some kind of arbitration and conciliation. So if you could just confirm whether that is the case, and what is the update on that? And what do we sort of plan for that discussion going forward?

Mr. Manikantan Viswanathan — Chief Finance Officer

Yes. And Abhijit, can speak better in subtleties I think it will not be correct on my part to kind of put any commentary around this. But yes, some proceedings are happening on that front.

Abhijit Akella — IIFL Securities — Analyst

So the idea is that we’ve been still sort of trying to see if a deal can happen there? Is that the thought process behind that or…

Mr. Manikantan Viswanathan — Chief Finance Officer

No. This is what I said, Abhijit, that in the matter we see there are certain proceedings, legal initiatives taken by us. So I think it is not correct on our part to put a lot of detail and comment with it on call.

Abhijit Akella — IIFL Securities — Analyst

Understood, sir. Thank you somch. I will come back.

Operator

Thank you. Our next question is from the line of Bharat Shah from ASK Investment Managers. Please go ahead.

Bharat Shah — ASK Investment Managers — Analyst

Yeah. Two questions. One, on talent management, retention, nurturing and growth. What are the thoughts, strategies and ideas? We have seen, over a period of time, kind of a recurrent separation of talent time to time.

Mr. Mayank Singhal — Vice Chairman and Managing Director

Yes. So as you’ve seen, Bharat, we have just now put the whole strategy of develop and deliver agenda for putting a new purpose with strategy to put the whole talent map together. Clearly, the organization, looking at the objective that needs to be achieved, it looks at talent and talent manhunt approaches in line to that. As you would have seen, certain talent was acquired in order to help and augment the organization to grow and move to the next level.

While we — generally, we have been able to develop a new talent which has come in shape with the leadership of the two leaders today, we have lots experience to drive the future strategy growth. And as a constant drive, we have taken many initiatives in this area, and we are continuing to grow in-house talent in line with the competence and capabilities required for the future growth as which has been defined and described by the operating business model.

Bharat Shah — ASK Investment Managers — Analyst

Mayank, your voice is not very clear. If you can stick closer to the mouthpiece or without the speakerphone, I think it will help. So are we kind of happy about our initiatives or the rigors also of concern given a fair number of departures that we have seen.

Mr. Mayank Singhal — Vice Chairman and Managing Director

Well, I’m not sure that what level of departures that we are talking because some have been retired, some have moved on because of certain data. And we have enough talent in-house, which has taken up charge and shape, which was developed, which is there. So if I still look at the data points, PI’s attrition rates are far lower than the industry average, which has been faced in today’s growth opportunity that the industry is operating, right?

But at the same time, we are looking to always — today’s world is a little different world of the youngsters to the point is that we are working on a strategy where we have well-mitigated risks from talent by developing talent internally. And most of these positions and growth rates have been taken internally, and we continue to invest in building talent and acquiring certain talent back in alignment to the strategy of the business areas that we want to focus for us, yes?

Bharat Shah — ASK Investment Managers — Analyst

Okay. My second question, going to back into the past and projection for the future. So four years back when we were discussing, we were seeing that in five years’ time, we should be $1 billion business and capital efficiency to be in the 30s, return on capital employed. $1 billion four years back meant about INR6,800 crores or thereabout.

So are we on the way next year to be around that ambition and on capital efficiency objective of — in the 30s rather than 20s? And correlated to that, if we are to thereafter think of our business, whether in three years’, four years’ or five years’ time, we believe, given initiatives, given client engagements, new chemistries and our product offering basket, are we likely to see the business doubling, whether three years thereafter, four years, five years?

Mr. Mayank Singhal — Vice Chairman and Managing Director

So that was a relevant question. We’re not an organization that likes to be asleep. We want to grow at an aggressive pace. And clearly, yes, we want to deliver that. I’m pretty confident that given the energy, the drive of the team internally and a passion to grow in the areas of our competence in the areas of technology, more than partly anchored with the ESG framework and sustainability, we don’t see these kind of challenges, obviously, both organic, inorganic, to achieve the objective that we have set out for ourselves and we’ll continue to do that.

Obviously, if we look at what’s the big question would be today if we didn’t have one of the M&A opportunity, would we be well there in that number? But — well, we are looking for other opportunities. So what stops us from not getting to that number, which we set ourselves out to achieve? And what we are looking to do in the next four to five years, we would like to be more aggressive in order to get to the space faster. And that’s why we’re building the organizing resources. So we’ve already deployed a large number of resources in the areas for growth opportunity and amplification.

Bharat Shah — ASK Investment Managers — Analyst

And the reason why I’m asking that question is opportunity probably here has never been better for India in general, and more specifically for PI, given the kind of favorable position PI has put itself into with research-driven chemistry and folding into allied branches as well as client relationships and global affinity for India-based quality specialist players like PI compared to the other competition in other parts of the world. Therefore, I’m in trying to get more ambitious probably has never been tomorrow, probably it is yesterday, I would have thought.

Mr. Mayank Singhal — Vice Chairman and Managing Director

Yes. Ambitions are never going to die, number one. Number two, as you rightly said, technology may be — so technology is not probably sometime we’re chasing the long tail with steps of differentiator. And when you get to that the tail gives you a spike so you see PI’s work in the discovery area. And this is a long tail.

And so therefore, we are not giving up that and nothing like the opportunity that India today has to offer. We are looking at technology capability, which is going to be more globalized rather than localized and opportunistic in nature. So we are still — we’ve not left our part. As you know, we’ve set apart and we’re moving up the value curve. And as we mentioned, we’re focused on the discovery area and we’re talking to global partners on the development front, which puts PI at a completely a different technical competence — capability compared to any of its competitors in that scene.

On the other hand, our chemistry capabilities, which have been leveraged across the other application areas, would also augment strengths and also widen our offerings to a different bucket — basket of customers and yet create a larger differentiator anchored with some of these areas. So we are fully clear and confident that this would give us the next pickup of growth.

It takes the base foundation to become strong and when you’re developing technology that the pickup started pretty well. And we are pretty confident that we are well an underway to do that. And initiative is while positive, but I — we have to make in India for the world with a differentiator to say that the best of technology, the best of cost. So we are focusing on and led, yes, not just as leader of cost today or the opportunity the landscape is offering now.

Bharat Shah — ASK Investment Managers — Analyst

Thank you. I continue to be admirer and well wisher of PIs journey so far. I hope that is the way it stays

Mr. Mayank Singhal — Vice Chairman and Managing Director

Thank you. Thank you for well wishes.

Operator

[Operator Instructions] Our next question is from the line of Tejas Sheth from Nippon India. Please go ahead.

Tejas Sheth — Nippon India — Analyst

Yes. Hi, good afternoon. On the — as we continue to pursue the pharma CSM space through inorganic route, what is the aspiration for us to have the revenue from the same over next three years organically? Hello? [Technical Issues]

Mr. Mayank Singhal — Vice Chairman and Managing Director

We didn’t get your question. Sorry, can you go back?

Tejas Sheth — Nippon India — Analyst

The question was on the pharma CSM. So obviously, we are pursuing the inorganic route on that segment. What will be our aspiration to — from that segment over the next three years on the revenue side organically?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Organically? Well, right now, it’s a business transaction, but obviously, within the three digits, which we are clearly looking to see because otherwise it’s not going to be substantially enough for PI to chase.

Tejas Sheth — Nippon India — Analyst

So just a clarification on that. So even if we don’t acquire any asset, are we looking at INR1,000 crores of revenue potential over the next three years?

Mr. Mayank Singhal — Vice Chairman and Managing Director

That would be — INR1,000 crores in pharma, my friend, is a pretty large revenue, which will not be possible organically, to be very straight, in three years, yes — no. No chance. But obviously, INR150 crores when you’re looking at the area of just non-GMP. So the organic growth is where we’re going to leverage to grow that revenue in three years. You can’t get that number in an organic way — in an organic way side.

Tejas Sheth — Nippon India — Analyst

Okay. Okay. And on this agro CSM side. I mean if we see four years ago, I mean, there were only three, four players, which were very key to the innovators. But as we see today, there are many, many players and most of the business now is done through RFQs rather than on a relationship basis. Are you seeing intense competition on CSM agro side?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Well, I’m not sure about what you mean by RFQs in this because — while it depends on the where you are, number one. Yes, there are many more players. The landscape will expand as businesses expand and as the first movers. But again, which part of the pie because there also outsourcing moving from China to India, which could be also in the generic space, which could be a product this company is already making or intermediates companies are making and are getting to these opportunities, which they weren’t competitive for cost in the past.

So clearly, for new generation, new product development, I am not seeing the RFQ approach really happening. It is still based on competencies, capabilities and partnership of trust, which are taking that day. And they definitely have a role to play and specifically where they see that there is looking for continuous improvement to deliver efficiency in costs.

So obviously, competition is going to come and will come. But the point is what are we doing and what we continue to do to create — be ahead of the competition? And that’s why we have our capabilities in the area of technological buildups or what we see in the new-generation products to value offer to our customer. So that’s where it is right now. Yes.

Tejas Sheth — Nippon India — Analyst

Thank you very much.

Operator

Thank you. We take the next question from the line of Khushi Doshi from Axanoun Investment Management. Please go ahead.

Khushi Doshi — Axanoun Investment Managemen — Analyst

Thank you for the opportunity. So FY ’21 annual report mentioned that 40 — 60 molecules were synthesized during the year, out of which 20 were scaled up and six were transferred successively to the next stage. And five molecules were commercialized during the year. So my question here is what is the percent of molecules that are commercialized for the company from the total molecules synthesized site? It would be better if you could provide the last year as well as the five years’ average number.

Mr. Mayank Singhal — Vice Chairman and Managing Director

Well, honestly, we don’t have them with us right now. But typically, it’s a funnel, so the funnel of commercialization because some have three-year gestation, two-year gestation, five-year gestation periods or some will have shorter gestation periods. But nothing that’s commercialized from an inquiry to commercialization less than two years. The typical timeframe for producing samples, approvals, palletization, further approvals, regulatory work that is applicable and then putting up facilities or optimizing facilities for production.

Khushi Doshi — Axanoun Investment Managemen — Analyst

Okay. Could the number be provided any time later?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Yes. We can get someone to give that to you.

Khushi Doshi — Axanoun Investment Managemen — Analyst

Right. Also could you shed some light on what type of electronic chemical is the company working on?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Well, there’s — we can’t put detail on to that. As you know, we are bound under very strict confidentiality clauses with our partners. Yes, we are working in that segment. And again, they’re an innovative area.

Khushi Doshi — Axanoun Investment Managemen — Analyst

Okay. Thank you.

Operator

Thank you. Our next question is from the line of Sumant Kumar from Motilal Oswal. Please go ahead.

Sumant Kumar — Motilal Oswal — Analyst

Sir, can you talk about the AWKIRA performance in this quarter? And what kind of target we have for this product for next two to three years?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Well, the performance, I would say, as we’ve highlighted, the performance of the product has been highly satisfactory actually. We’re very well forward with the kind of performance. More importantly, this has been done because of the excellent execution and hard work of our team to have done a phenomenal field work activity for concept selling, which has shown us a 3 times jump over last year.

And this the way I see it, going into the future, it’s competition-sensitive, so we definitely are very gung-ho as I was saying, aggressive growth plans on this product. Not only that, but we have a bunch of two, three new other molecules which are coming in, which we would see a huge shift in the way we see demand in the domestic sector.

Sumant Kumar — Motilal Oswal — Analyst

So do we have any target of some particular numbers we are going to reach in maybe a couple of years?

Mr. Mayank Singhal — Vice Chairman and Managing Director

I would not like to highlight that for, as I said, for competitive challenges — purposes and also — but yes, as I said, we have pretty good aggressive growth numbers and we are confident that, that can be done. Yes?

Sumant Kumar — Motilal Oswal — Analyst

Okay. And the product you have launched Pb Knot, can you talk about the potential target. Overall, what kind of growth potential in this product?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Prashant, maybe you can give some inputs on the Pb Knot and how you see this as a sourcing progress. Maybe, Prashant, are you there?

Mr. Prashant Hegde — Chief Executive Officer – AgChem Brands

Hi. Good afternoon. So PB Knot is a novel technology, which we are basically widely testing at this point of time. And this year also it has gone through a lot of testing and trials — commercial trials. We are hopeful to commercialize this in the coming years in cotton area.

This product is a pheromone-based technology and it is basically tied to the plant, and it has to be a community approach which farmers have to adopt. So that is why we are also working with various communities, various FPOs and the government organizations in Maharashtra and Punjab as well.

So because it’s a novel insecticide, it is a new approach, which we have to follow and a community approach. So it is going to take a little more time than the regular insecticides. But it is a good product, and we are hopeful at this point in time there are no other products which can give this kind of control on Pb Knot, which this product can give.

So because of the community approach which we need to follow, so it would take a little more time to scale up. But it is going to be a sustainable product, and it is a long-term product. That is our theme today.

Mr. Mayank Singhal — Vice Chairman and Managing Director

And just one more thing I would add, the thing about worms is, it is a pretty menacing in the cotton pests and there is no other solution. But this is again a unique concept selling, where we will use the amount of public partnership and participation to make sure that the farmer is able to see the benefit.

And I must say, there’s a huge interest which has been shown by various state governments and there are governments that say that hopefully I can partner to put this concept into the market.

And I think the positive outcomes have been very encouraging, to the extent that we have been able to socially make an impact of this product and make sure the farmer is able to get a better crop and yield and not get damaged by this pest called Pink Bollworm.

Sumant Kumar — Motilal Oswal — Analyst

Is it a licensing product?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Sorry, what did you ask?

Sumant Kumar — Motilal Oswal — Analyst

Is it a licensing product?

Mr. Mayank Singhal — Vice Chairman and Managing Director

No. It is our own registered product. Yes, obviously, we partnered with a Japanese company, but we have exclusive license for Asia.

Sumant Kumar — Motilal Oswal — Analyst

Okay. Thank you so much.

Operator

Thank you. Our next question is from the line of Surya Patra from PhillipCapital. Please go ahead.

Surya Patra — PhillipCapital — Analyst

Yes. Thanks for taking my question. So just on the — given the commentary on the flow chemistry side what you have mentioned, there is cost efficiency — opex efficiency as well as capex efficiency driven by that. So is it fair to believe that going ahead, whatever capex that we will be planning, that would be largely based on that? If that is yes, then what technological challenges that you could face in developing — or in developing the processes for the flow chemistry technology? Hello?

[Technical Issues]

Operator

Ladies and Gentlemen, we request you to please remain connected. It looks like Mr. Singhal’s line has dropped out. We’ll get reconnect him back. Please hold the line, the call will start shortly.

Ladies and Gentlemen, thank you for your patience. We have the line for the management connected. Mr. Patra, we request you to please repeat your question.

Surya Patra — PhillipCapital — Analyst

Yes. Thank you. Sir, just I was asking about the flow chemistry about which that you have commented, that this is going to have both opex efficiency as well as capex efficiency. So going ahead, is it fair to believe the larger chunk of our capex will be driven by that? And if yes, what challenges that one would see in developing the processes to fit to the flow chemistry?

Mr. Mayank Singhal — Vice Chairman and Managing Director

I’m not getting your voice very clearly. Sorry. We talked about flow chemistry then the other parts were muffled before.

Surya Patra — PhillipCapital — Analyst

Is this line is correct now, sir?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Maybe you can put a bit further away, because the voice is cracking. So if you moved up further away from your phone maybe clear it.

Surya Patra — PhillipCapital — Analyst

Okay. So I was asking that, sir, since we have talked about and that is known that the flow chemistry, if it is implemented right, then it can offer both capex as well as opex efficiency meaningfully than the batch process. So if that is the case, then going ahead, a large part of our capex would be driven by that?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Well, let me put it this way. This is, number one, it’s a flow chemistry is a concept which has been around for a while, which is now some people look at commercially. It is not that it can replace back processes. It is not something that in all chemistry in all kind of areas this can replace. And yes, in certain critical areas, it can replace where it can get both operational excellence and also can give you safety and a capital cost structure.

So PI is building this capability and looking at certain of the areas of opportunity that we have, where we can actually bring this value upward to the table for the company, right? And also build this capability, maybe we can drive more projects and strategy aligned to that, yes.

Surya Patra — PhillipCapital — Analyst

My second question is on the kind of new areas that we have been talking about, sir, whether it is the fine chemical one or the pharma one or like that, or the electronic chemicals for we have already initiated something.

So see, let’s say, on the three-year time period horizon, what is the kind of revenue mix that we should be seeing out of non-agro base? And also, if you can add to that, in terms of customer composition on the CSM side for the non-agro base, what is the composition it would look like three years down the line?

Mr. Mayank Singhal — Vice Chairman and Managing Director

In the organic way in three to five years, you would see about 15%, 20% of this, because we’re looking to continue to grow on that big base there and also at the same time is base to catch up.

Surya Patra — PhillipCapital — Analyst

Okay. Same is the case even the customer composition.

Mr. Mayank Singhal — Vice Chairman and Managing Director

Yes.

Surya Patra — PhillipCapital — Analyst

Okay. Sir, just if I can just add in here, like what is the current base of our agro CSM customer base? And what is the potential target customer base? And whether we have enough scope to add more customer to our customer base or something on that front also if you can add?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Well, there’s always a scope, but I think we’re covering most of the customer bases in that, where we are focusing on the products and the customer manufacturing point and looking at the pipeline working along that line, yes.

Surya Patra — PhillipCapital — Analyst

Yes. Thank you, sir.

Operator

[Operator Instructions] Our next question is from the line of Rohan Gupta from Edelweiss. Please go ahead.

Rohan Gupta — Edelweiss — Analyst

Yes. Hi, sir. Good afternoon. Sir, slightly in line with the previous question only. Sir, we have been a leading player in agrochemical CSM and among the, probably, such player to interest in that business and have done extremely well. But somehow, sir, probably we have not been able to scale up our capabilities in other segments in non-agro, whether it’s pharma or probably in newer segment. Sir, do you think that there are limitations that from agrochemical players it’s challenging to get into other businesses, while other chemical players probably who are non-focused — non-agrochemical focused are probably able to scale up their capabilities in other segments? Is it a limiting factor, sir?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Well, I’m not — I don’t think so that at all. I think you focus on something, achieved height and then very clearly, as we’re saying, we’re now focusing on the other segments and going at it. And pharma is a very clearly defined strategy. Okay, in the short term, we have this challenge of this M&A opportunity. But I don’t see that as a challenge, it is more about getting it done. And that’s where we are. And we see the opportunity in the other areas which has already entered.

Obviously, we would have seen that the CSM business what we have achieved has not happened overnight. It’s taken 25 years — 20 to 25 years to get to where we are today, right? So it takes time. And if you want to focus strategically in the right space, and some of these we’ve initiated long ago, I mean if you today talk the non-electronic chemicals, we’re talking about for now three years to five years. In the last three years, we’ve been working on it. Eventually, now we’ve got commercialization and we see a good landscape coming up over the next two to three years. So this is what it takes in this business.

Rohan Gupta — Edelweiss — Analyst

So sir, probably in products like electronic chemicals and all other ones, we open the opportunity. Can we expect there will be very fast run-up in terms of revenues and growing possibilities and it can also add more customers? Will this product will be patented by or will be our proprietary product, which can be offered to many other customers?

Mr. Mayank Singhal — Vice Chairman and Managing Director

No, no. We’ll be working with custom manufacturing approach there. So there’s no proprietary — we’re working with proprietary-proposed products that we may some proprietary capabilities that we could bring in. Yes, you will see it. It will take time to get in and it takes time to build capability and credibility in the sector. But once we’re able to do that, the multiplier effect starts coming in.

Operator

Thank you. We’ll take the next question from the line of S. Ramesh from Nirmal Bang. Please go ahead.

S. Ramesh — Nirmal Bang — Analyst

Yes. Thank you very much and good afternoon. Is it possible for you to tell us what is the kind of capacity ramp-up we’re expecting the two MPPs you have started in the first half of the year?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Well, I’m not sure about the capacity ramp-up, but they are multiproduct plants, so each product has a different capacity which it produces. And so right now, they are in the process of their augmentation of the capacity and they’re ramping up. It’ll take — obviously, it can take up to two, three years really when they get to the full capability because, one, is getting the capacity as for the demand moving in or the products that we put in. Second is also learning and improving the efficiency of the products that we produce. And so it takes three to four years before the whole plant starts getting full capacities from the multiproduct approach, yes.

S. Ramesh — Nirmal Bang — Analyst

And the second part is in terms of your CSM business growth, is it possible to share with us any incremental inflows in your CSM order book because you have indicated a decline from $1.5 billion to $1.4 billion. So how do we read that? Is there a reduction in the annual order inflow? Are you getting the growth from the annual business that you do?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Well, given the way challenges are today, we are not looking at order book as a key driver because if we have regulatory — the registered product producer for these companies has taken multiple years to develop. Order book and risk of that is minimum for the old business moving out. We are more focusing on the quality and the content of the business followed with the volatility, which continues in the market. Rather than getting to order books, we are more focusing on stickiness creation with the customer and then get into quarterly or monthly or half yearly or yearly negotiation based on the movement of prices rather than building order books.

S. Ramesh — Nirmal Bang — Analyst

Okay. Fine. Thank you very much. Wish you all the best.

Mr. Mayank Singhal — Vice Chairman and Managing Director

Thank you.

Operator

Thank you. Our next question is from the line of Varshit Shah from Veto Capital. Please go ahead.

Varshit Shah — Veto Capital — Analyst

Hi, Sir Thanks for the opportunity. Sir, my question is on the margin side…

Operator

Mr. Shah, sorry to interrupt.

Varshit Shah — Veto Capital — Analyst

Is this better now?

Operator

Yes. Now it’s a little better. Please go ahead.

Varshit Shah — Veto Capital — Analyst

Okay. Thanks for the opportunity. Sir, my question is on the EBITDA margin and higher SG&A expenses. I think we have some tailwinds coming from increase in the utilization levels of our existing assets. So given the cost pressures and one-off, can you give us some color on how much of the SG&A expenses had a one-off element so that we can understand how much impact came from the inflation?

Mr. Rajnish Sarna — Joint. Managing Director

Yes. Coming to the — there are two, three parts to your question. Coming to the one-offs, the one-offs in this period has been close to INR20-odd crores in this period of nine months. The other reason for this increase that you are seeing is also the fact that the fuel cost has gone up quite substantially during this period. So that is another factor, which is reflecting in the percentage.

The — another factor is that some of — because the last year was majorly impacted by COVID and some of these expenses, for example, traveling, and for example, a couple of others expenses, they were at quite an abnormally lower levels. And now that this year activities have, barring a few months, were normalized, those expenses have again gone back to the earlier pre-COVID levels. So yes, I mean, these have been some of the factors, but in a nutshell, one-off kind of expenses were close to INR20-odd crores during this period.

Varshit Shah — Veto Capital — Analyst

Sure. So very helpful. Sir, my second question is on the agro CSM side. So one of our large molecule for a U.S.-based customer is going off-status. So do you — any sort of scenario where the CSM business for that particular molecule from other international players and domestic have actually throws up a good volume opportunity for us, given that we’re already ahead in the cost curve of that particular molecule?

Mr. Rajnish Sarna — Joint. Managing Director

Well, I’m not sure which molecule you are talking, but…

Varshit Shah — Veto Capital — Analyst

But it’s one of the top two for — like for the latter.

Mr. Mayank Singhal — Vice Chairman and Managing Director

Pardon?

Varshit Shah — Veto Capital — Analyst

It’s one of the top two.

Mr. Mayank Singhal — Vice Chairman and Managing Director

Can you…

Operator

I’m sorry, sir, we can’t hear you, Mr. Singhal.

Mr. Rajnish Sarna — Joint. Managing Director

Yes. So I was not sure what is that question. But if you can please repeat the last part of your question again?

Varshit Shah — Veto Capital — Analyst

Yes. So are you referring to one of the top two molecules, which we do in the contract manufacturing for a U.S.-based MNC. And that is going off-patent in this year and next year in some of the markets. So do you see the opportunity to expand volumes for new customers for that particular molecule?

Mr. Mayank Singhal — Vice Chairman and Managing Director

No. Sorry, we have the business of custom and contract manufacturing that we work with partners in, right? We are not going to cut shores by giving it to their competition, but we will support them to see how we can build the business with them.

Varshit Shah — Veto Capital — Analyst

No. So I was referring to in partnership with the U.S.-based client doing it because their revenues will increase with the partnerships they are doing across the globe. So my question was in relation to that only.

Mr. Mayank Singhal — Vice Chairman and Managing Director

Yes. Those are discussions which we make between the partner and us, yes? That’s the way it is.

Varshit Shah — Veto Capital — Analyst

Okay. Understood. All the best.

Operator

Thank you. Our next question is from the line of Sangeeta Purushottam from Cogito. Please go ahead.

It looks like the line is disconnected for this participant. In the meanwhile, we’ll move to our next participant. That’s Dhavan Shah from ICICI Securities. Please go ahead.

Dhavan Shah — ICICI Securities — Analyst

Yes. Thanks for the opportunity. So most of my questions have been answered. Just the one question, I mean you have passed on the input price inflation this quarter. So would it be possible to break it up between the volume realization growth within these two segments, CSM and the Domestic one?

Mr. Mayank Singhal — Vice Chairman and Managing Director

Well, we don’t have the data…

Mr. Rajnish Sarna — Joint. Managing Director

Mani, you would have those numbers, Mani?

Mr. Manikantan Viswanathan — Chief Finance Officer

Not really. We don’t have that breakup.

Dhavan Shah — ICICI Securities — Analyst

But most of that would be volume this quarter, right?

Mr. Rajnish Sarna — Joint. Managing Director

Yes. And most part of it is volume. There is — obviously, there is some price hike, which we have taken both in Domestic as well as in Exports. But right now, Dhavan, that number is not there. But yes, Mani can certainly provide you on the sideline.

Dhavan Shah — ICICI Securities — Analyst

Sure, sir. And just one thing is on the CSM, we have seen the highest number this quarter. So I mean once we’ll pass on the input price inflation for this segment also, can we see the jump up in the revenue of this segment meaningfully over the period of time?

Mr. Rajnish Sarna — Joint. Managing Director

Yes. So we are certainly expecting to — with this full impact of this cost increase is done then there will certainly be a positive impact on the margins.

Dhavan Shah — ICICI Securities — Analyst

Sure, sir. Thanks. That’s all from my side.

Operator

Thank you. Our next question is from the line of Manish Mahawar from Antique Stockbroking. Please go ahead.

Manish Mahawar — Antique Stockbroking — Analyst

Yeah. Good afternoon, sir. Just wanted to know what was the CSM business market size last year CY ’21, and what was the market growth and our market share, if possible?

Mr. Rajnish Sarna — Joint. Managing Director

Come again? Can you please repeat? CSM business?

Manish Mahawar — Antique Stockbroking — Analyst

CSM market size globally. And what is the growth rate in the last year, CY ’21? And if possible, what is our market share?

Mr. Rajnish Sarna — Joint. Managing Director

Well, this is a little tricky question because the market size depends on what kind of portfolio of products that you consider. And as you know that we work only in early-stage molecules and all. So considering that kind of product profile and portfolio, I mean we believe that the market size is overall globally anywhere between $6 billion to $8 billion, okay? And given our size, you can clearly imagine that what is the kind of market share currently we have. And obviously, this market — because these are early-stage molecules, the growth trajectory is reasonably high, okay, and — which is what is also reflecting as if you see in our own growth CSM export.

Manish Mahawar — Antique Stockbroking — Analyst

Okay. And maybe last — one more question. So just what could be the tax rate for this year and next year, if possible, can you share?

Mr. Rajnish Sarna — Joint. Managing Director

Mani?

Mr. Manikantan Viswanathan — Chief Finance Officer

Yes. No. In the current year, we are on the effective rate around 15%. For the next year, we will play it — post the next quarter, please.

Manish Mahawar — Antique Stockbroking — Analyst

Sorry. This year, is it 15% and next year?

Mr. Manikantan Viswanathan — Chief Finance Officer

Yes. I said it is 16%, 1-6.

Manish Mahawar — Antique Stockbroking — Analyst

Okay. Okay, sir. Thanks.

Operator

Thank you. We’ll take a last question from the line of Deepak Chitroda from PhillipCapital. Please go ahead.

Deepak Chitroda — PhillipCapital — Analyst

Yeah. Thanks for the opportunity. My question is on the basically on the CSM side, if you can basically tell us in terms of number of MPP plants, which we have now on the plant, example, Panoli, Jambusar and Isagro which we have after commissioning these two plant current year.

Mr. Mayank Singhal — Vice Chairman and Managing Director

So I didn’t get your question on the number of MPPs.

Deepak Chitroda — PhillipCapital — Analyst

Number of MPP plants which we have now on the plant side.

Mr. Rajnish Sarna — Joint. Managing Director

We have 15 plants, all put together.

Deepak Chitroda — PhillipCapital — Analyst

Okay. And I think Panoli will be having the majority of the plants?

Mr. Rajnish Sarna — Joint. Managing Director

Yes. I mean the major plant…

Mr. Manikantan Viswanathan — Chief Finance Officer

Bumbers, yes. But capacity is no.

Mr. Rajnish Sarna — Joint. Managing Director

Yeah.

Deepak Chitroda — PhillipCapital — Analyst

Okay, okay. And sir, my second question is towards the volume and the price side, which I think you partially answered in the previous participant question. I think the major part of the — as you mentioned that the growth has come from the volume side, right? So it is correct to say that probably you might have taken around 2%, 3% kind of price hike and probably might take another — or maybe double price hiking for the next quarter?

Mr. Rajnish Sarna — Joint. Managing Director

As we have explained in our release that the partial impact of this price hike is already reflecting in our quarter three numbers. And some insight, balance impact will also surely reflect in Q4, because the cost trend is still continuing. And there is always a lead and lag whenever you have this pass-through.

Deepak Chitroda — PhillipCapital — Analyst

Yes. So basically, I was just trying to understand that price increase we’ll be taking probably for the next quarter will be slightly higher compared to what we did in Q3?

Mr. Rajnish Sarna — Joint. Managing Director

This all depends on what product, what price is getting impacted. So for some products, it has already been done in this quarter. And for remaining product, it will come in the next quarter.

Deepak Chitroda — PhillipCapital — Analyst

Okay. Thanks.

Operator

Thank you. Ladies and gentlemen, that was the last question. I now hand the floor back to the management team for closing comments. Over to you, sir.

Mr. Mayank Singhal — Vice Chairman and Managing Director

So thank you. Thank you, everybody, for all your time, support and participating in the call today and wish you all a very safe times ahead. And I’m sure that in the coming times, this Omicron should be over and it should be back to normal for you and your families. Thank you.

Operator

[Operator Closing Remarks]