Punjab Chemicals and Crop Protection Limited (PUNJABCHEM) Q4 FY23 Earnings Concall Transcript

Punjab Chemicals and Crop Protection Limited (NSE:PUNJABCHEM) Q4 FY23 Earnings Concall dated May. 05, 2023.

Corporate Participants:

Vinod Gupta — Chief Executive Officer

Ashish Nayak — Chief Financial Officer

Shalil Shroff — Managing Director

Analysts:

Manish Mahawar — Analyst

Vivek Ganguly — Nine Rivers Capital — Analyst

Ravi Mehta — Deep Financial Consultants — Analyst

Ayush Mittal — Mittal Analytics — Analyst

Deepak Poddar — Sapphire Capital — Analyst

Chirag Shah — White Pine — Analyst

Rohit Nagraj — Centrum Broking — Analyst

Analyst — ITI Mutual Fund — Analyst

Satish Pandya — — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Punjab Chemicals and Crop Protection Q4 FY ’23 Earnings Conference Call hosted by Antique Stock Broking.

[Operator Instructions].

I now hand the conference over to Mr Manish Mahawar from Antique Stock Broking. Thank you and over to you, Mr. Mahawar.

Manish Mahawar — Moderator

Thank you, Tanvi. Warm welcome to all the participants on the 4Q FY ’23 Earning Call of Punjab Chemicals and Crop Protection. From the management, we have Mr. Shalil Shroff, MD; Mr. Vinod Gupta, CEO; and Ashish Nayak, CFO on the call.

Without further ado, I would like to hand over the call to Mr. Gupta for opening remarks. Post which, we open the floor for Q&A. Thank you, and over to you, Mr. Gupta.

Vinod Gupta — Chief Executive Officer

Thanks, Manish, and good afternoon to everybody on the call. With me in the room is Mr. Shalil Shroff, Managing Director and Mr. Ashish Nayak, the CFO for the company.

So, all of you must have already seen our investor presentation, which is already uploaded on our website. If you look at the year that has gone by, we started the year on a very positive note which was maintaining the momentum of growth that the company has built over the last few years. However, during the last quarter there was overall correction that was happening in the industry. The industry was struggling with two challenges, one was inventory correction and second is a price correction. And that is what actually resulted into slowdown in demand for some of our products and this is where we have seen some challenges in the results of Q4. But as a management, we strongly believe this is an aberration to the growth journey that we have sort of started a few years back. Even in this complex market condition, we basically have been able to perform good on some products, some products where there was a muted demand in the last quarter, though that demand has started picking up. Also given the market dynamics, we are recalibrating our growth strategy and also, we are improving our processes.

Last few years if you see the way company has moved, as we sort of recovered from the past setbacks. Board has consciously decided to professionalize the management and that’s where the complete leadership team has been rebuilt over the last two years. I joined the company about two and a half years back and with me lot of other professionals have joined. In this last two years, we have strengthened our processes, we have strengthened our technical capabilities, we have strengthened our EHS processes, which definitely is very-very critical given that we are looking at acquiring or rather partnering with lot of overseas and international customers.

Also we have focused on asset reliability, asset renewal and we’ve also invested continuously in addition of capacity for the products where we see new growth. Also, in recent past now we have started rebuilding and strengthening our R&D team. Recently, one very senior person who has more than 30 years of experience with companies like Bayer, Meghmani, PI Industries has joined us and this R&D effort basically is helping us to build our product portfolio, which will add to growth of our company. We basically are adding more resources, more infrastructure. Also tying up with some universities for strengthening our R&D effort. I’m also happy to announce that we have developed several products during last year. These products where we have done–some products we have done R&D and piloting, in some products even we have delivered commercial samples to the customers and this commercial products are now getting lined-up for commercial launch in the market. We have focused on azole chemistry, where we are centering or rather capitalizing on our strength of bromination as a chemistry. These molecule whatever we are being worked upon–we are basically developing molecules which will have a growth potential and in the market for next 15 to 20 years. So those are the kind of molecules that we are focusing upon. If I look at the next year, mainly, the focus we will have-we will focus on threefold initiatives. One, we have actually interested in last 1.5 years with lot of MNC’s and we have discussed possibilities of product development, manufacturing contract for long-term. And as a management we believe we are reaching a stage where we will start signing formal contracts during the year. So that will be the first focus area for for our growth. Second, also the whatever molecules that we have developed, we believe that now we will be able to capitalize once the market condition stabilizes and we are in touch with both local as well as overseas partners to take this to commercial scale. And finally, we want to also continue to focus on our R&D initiatives where we want to improve competitiveness of our existing products and also the new products that we have developed, so that initiatives will continue. Energy prices have continued to be high and that’s where we have started looking at alternate fuels. So we probably will invest during the year on an alternate source of energy, so that our energy cost starts coming down significantly. So this is the kind of initiatives that we are taking to make sure that the growth journey, the profitability, everything continues in the future.

Now, I will hand over to our CFO, Mr. Ashish Nayak to take you through the numbers and I also welcome him to the call because he joined us recently, and he brings in about more than 26 years of rich experience and he has worked in multiple high-growth sectors like chemicals, pharmaceutical, engineering and retail. We are sure that he will play an instrumental role in the coming years in the growth of the company. Over to you, Ashish.

Ashish Nayak — Chief Financial Officer

Thanks, Vinodji for that. Hello everyone for connecting with us on the call today. I’ll briefly summarize our financial performance for the quarter and for the year. On the quarterly performance, revenue from operations for Q4 FY ’23 was INR195 crores. The trend has been positive for the year as our FY ’23 revenue of INR1,006.21 crores is almost 7.8% higher as compared to FY ’22. In FY’23 the export market share has increased to 56%. The gross margins have remained steady for the quarter at 38.8% and 36.8% for the entire year. EBITDA has been relatively flat year-on-year while the margins are lower. We registered an EBITDA of INR21.2 crores with 10.8% EBITDA margin in Q4 FY ’23. For FY’ 23, the full year, The EBITDA stands at INR1,002.6 crores, 20.2% margin EBITDA. The net profit for the quarter stood at INR3.2 crores and for FY ’23 at INR61.1 crores, PAT margins for Q4 and FY ’23 is 1.6% and 6.1% respectively. During the year we have added fixed assets of INR29 crores, which is primarily towards upgrading technologies and infrastructure at the manufacturing facility. With this, I conclude the presentation and open the floor for further discussion. Thank you.

Questions and Answers:

Operator

Thank you. We will now begin the question and answer session. [Operator Instructions] First question is from the line of Pritesh Chheda from Lucky Investment Managers. Please go-ahead.

Pritesh Chheda — Lucky Investment Managers — Analyst

Sir. On your revenue performance for the quarter four, in the presentation, you have mentioned that it has been on backdrop of lower demand in domestic market because of weather conditions. Now this comment specifically seems to do with the domestic or local AgChem but the extent of drop that we see in the domestic business is quite significant and if you could tell us the other pieces of the business that is industrial and pharma. What happened there, because the drop cannot only be explained by domestic AgChem.

Vinod Gupta — Chief Executive Officer

Yes, so I mean I think domestic–if you see our AgChem business is the largest part of our portfolio. So any drop there obviously impacts overall performance. Industrial chemical has been steady. In fact, industrial chemical has been performing very well for last seven, eight quarters. So that performance is study. On pharma side, yes, we have seen some slowdown and some small impact of pharma was also seen. So overall drop in the performance, yes, majorly impacted by domestic demand. Also we have seen some drop in the exports demand especially in Europe, there has been an inventory correction and impact of this price reduction because the prices in the market have gone down after China is opened up.

Pritesh Chheda — Lucky Investment Managers — Analyst

Sir, can I intervene here. I cannot comprehend it because 50% what we have is in our understanding, your AgChem to non-AgChem split is 65-35. In that 65 AgChem 80% is export and 20% is local. So, which means about 12% to 13% of your total business is domestic AgChem. If 12% to 13% of your total business is domestic AgChem then I cannot interpret the comment that you made on the erratic weather conditions.

Shalil Shroff — Managing Director

No no. Please understand that during our calls, we have always told you that Q4 was a challenge. The challenge is because one is that the inventory correction. Please understand during COVID time people have bought a lot of products and also you can see that during the year ’22-’23, the weather has been a little different. So it is not that the business is lost. Because of the inventory correction, in Q4, we could not achieve the target which we had planned, which of course as we talk going into Q1 of this financial year, it’s back into track.

Pritesh Chheda — Lucky Investment Managers — Analyst

The slippage in the quarter four numbers, sir, have not been–because there was a call in February also but the slippage in the quarter four number is far higher than what even was ever talked about in quarter three or post quarter three call.

Shalil Shroff — Managing Director

I agree with you. I mean, I’m not trying to dispute that. But again, as I said, it was the inventory correction. When we did the call, we were well assured with the customers that they will pick up this quantity, but please understand, with all our customers we talk long-term business. So somewhere we have to give-and-take, but having said that, let’s not focus on Q4, let’s look at what is going to happen in the next year and we believe very strong growth we have in terms of the products not only the existing but newer one. So this is just a phenomena for the Q4, which I reflected, which would have been a little better, but yes to the expectation to us also, it’s not. But now that, with the customer, we have some sort of a long-term understanding and again reassuring with all our partners globally and locally, we believe and we are very confident that the quarters coming for the next financial year are going to be very robust.

Pritesh Chheda — Lucky Investment Managers — Analyst

Can you share the progress on those four products which are awaiting approval, two which were pending since last year and two which are lined up for FY ’24.

Shalil Shroff — Managing Director

Yes. So generally, when we talk about product profile. I mean, we have a lot in pipeline. But just focusing to your question. One was the pharma Intermediate. Y you’ll appreciate that the pharma market has also gone through a little bit of turmoil. You know better than what I would know. But having said that, we are in-line with the customer and we always have to work with them as I did mention in few calls that we had planned to launch this product last year, But unfortunately, we could not. So at the moment, there is further delay because of the customer getting his inventory correction at his as well as customer level. Regarding the two agro products, one agro product as I did mention that we have already got our EU approval for the herbicide, which we would sell, which was again for the Australian as well as the European market. Because please understand Europe is not one, there are many states, so there is a regulation in Switzerland, a different regulation in the Netherlands. So having said that, we are very confident that by September and post Jan of next year we should have full-fledged registration of these product. And the one more Ag product, which is already under a five batch analysis, which should come in stream for the data collection at our office, I mean at Punjab in the next three to four months. Once we have that it could take anywhere between six to eight months for registration.

Pritesh Chheda — Lucky Investment Managers — Analyst

From your comments, can I conclude that a lot of it is delayed and none of the four products now should be expected in FY ’24.

Shalil Shroff — Managing Director

I didn’t say that. You didn’t listen to me properly my friend. I did tell you that one product is already upstream. The second one, registration is already in September, we start. The third one, which I said is going to take time. And the fourth one, the intermediate would again start in September. Which we have administrated that we could do it in Q1 or Q2, but it would be spilling to almost Q3.

Pritesh Chheda — Lucky Investment Managers — Analyst

So, the first and the second has been received, the registration, is that?

Shalil Shroff — Managing Director

That’s right, that’s right.

Pritesh Chheda — Lucky Investment Managers — Analyst

Which was pending. So one was a KSM and one was AgChem for Brazil.

Shalil Shroff — Managing Director

That’s right.

Pritesh Chheda — Lucky Investment Managers — Analyst

Those two have been received?

Shalil Shroff — Managing Director

Yes, we have already got it. We have already started our sales and we believe because the season of this product is anywhere between November to I would say February-March. So last year, we have captured and that’s where I said the sales would reflect post Q3.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. If I have more questions, I’ll come back on the call. Thank you very much.

Operator

The next question is from the line of Vivek Ganguly from Nine Rivers Capital, please go ahead.

Vivek Ganguly — Nine Rivers Capital — Analyst

Thank you for the opportunity. I have two questions. One, when you say, the entry of Chinese manufacturers dampened the pricing in the market, that would largely happen if you have significant spot sale happening, would that be a correct assumption.

Shalil Shroff — Managing Director

Please understand that China for almost two years was not opened up. Raw material prices had gone very-very high. So at the moment, China is a little desperate, because overall as I did mention and because of the inventory correction. I also personally believe that China is a little desperate right now to sell at maybe 20%-30%-40% cheaper, but it is again a phenomena, which I believe should–if we look at from the. European point of view, by Q2 it should be okay. And for the Indian point, it would be from even Q1, gradually the prices should be back to where they were.

Vivek Ganguly — Nine Rivers Capital — Analyst

Right, so your expectation is by Q2, things should start settling down where the market is more or less squared up and so on and so forth, generally speaking.

Shalil Shroff — Managing Director

Because in Q4, also the sales because of the inventory correction, with all our customers we have looked at it and we have discussed with them and the inventory levels have gone down, and that’s where we, starting with Q1, Q2, what we have discussed with the customer, we would be back on track as we were last year, maybe a little bit more by adding more products by Q2 and Q3 in terms of newer sales revenue.

Vivek Ganguly — Nine Rivers Capital — Analyst

Please indulge me a little more. So from where you all have the longer-term contract while that offtake has been lower. Would it be fair to assume that the pricing is more or less indexed to the underlying raw material and you all have not seen any sharp downturns there.

Shalil Shroff — Managing Director

Yes, so two things is also raw material prices which were bought at a level. Fortunately at Punjab we didn’t have quite high inventory, but the raw material prices also have–which were at the high have been tapered down. So moving forward, we don’t foresee. But we have to be competitive in terms of getting into the market share.

Vivek Ganguly — Nine Rivers Capital — Analyst

Right, and I just wanted to understand the provisions that you have made, the INR3.8 crores for taxes and about INR1.8 crores interest provision, if you can just make us understand the two it will be very helpful and these would be accounted for above EBITDA. Right.

Shalil Shroff — Managing Director

Well. This is below the EBITDA, because this is towards taxation and interest finance cost. Let me explain as to what is the reason for that. In 2012-13 onwards for a few years, there were some delays on deposit of employees contribution towards PF. The same were deposited before the due date for filing of the tax returns, and we had avoided the disallowances. However in FY’22 the Honorable Supreme Court had given a verdict to disallow the amount deposited after prescribed due date. Accordingly, the provision for tax of INR3.86 crores and interest of INR1.84 crores has been recognized in this financial statement.

Vivek Ganguly — Nine Rivers Capital — Analyst

So these two would be one-off things and there wouldn’t be any other matter pending.

Shalil Shroff — Managing Director

Fully agreed, these are one-off things and there are no further other matters which are pending.

Vivek Ganguly — Nine Rivers Capital — Analyst

So if these were not to be adjusted for then your PBT would have been higher by these 12 months.

Shalil Shroff — Managing Director

Yes.

Vivek Ganguly — Nine Rivers Capital — Analyst

Okay, thank you. That’s all from me.

Operator

Thank you, ladies and gentlemen, in order to ensure that management is able to cover the questions from all the participants in the question queue, we request you to restrict your question to two per participant. The next question is from the line of Ravi Mehta from Deep Financial, please go ahead.

Ravi Mehta — Deep Financial Consultants — Analyst

Yeah, hi. Just a question on your top two products, the Metamitron and Metconazole. So is there any shift in volumes are you seeing, because we heard one of the peer company also signing in CMO order from a Japanese client. So are you seeing some shift in volumes.

Vinod Gupta — Chief Executive Officer

No I think on the two molecules, the Japanese molecule, basically our capacity is fully utilized and we don’t see any challenge there. And as far as Metamitron is concerned, this is more about market inventory correction. That inventory correction is now getting over, and we don’t see or rather, in fact, our forecast is that we will be similar or higher volumes in the current financial year.

Ravi Mehta — Deep Financial Consultants — Analyst

On both the molecules? Or on Metamitron?

Vinod Gupta — Chief Executive Officer

On both the molecules. So on the Japanese molecule, we are fully sold out. Our capacity is fully utilized, that will continue. And on the other product, our volumes should be similar or higher than this year in the coming financial year.

Ravi Mehta — Deep Financial Consultants — Analyst

Okay. Also, I didn’t see the order book number in the presentation. So can you share that.

Shalil Shroff — Managing Director

So I think and we had shown for the last three years, our order book was INR1500 crores and I think during the call we have tapered down to between 1250 to 1300. Moving forward in the next five years, the way we are looking at the existing business and the newer business we’re looking at easily another INR1500 crores, which would come in. Obviously, it would be partly within the existing molecules, enhancement of capacity and newer products.

Ravi Mehta — Deep Financial Consultants — Analyst

Okay. So, just lastly, if I can touch upon, maybe this year you are seeing these headwinds of inventory and price correction which should ease out in coming quarters. So any roadmap of how you look at maybe this year can have a hiccup, but how you look at the coming year as you are planning. We’ve been hearing about your roadmap that you’ve been articulating, so any changes there and how are you resetting the part, if you can just throw some light on it.

Shalil Shroff — Managing Director

So as we said that because of the inventory correction, we did change our forecast, but what we have said we believe strongly that it would be as planned within our business towards the coming years.

Operator

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

Ayush Mittal — Mittal Analytics — Analyst

Good afternoon, sir. So first thing, which I want to understand is on the volume and capacity side, like if you look at the cash flows you have been categorically investing into capacity upgradation and improvements. So can you share what is the kind of capacity that you have been able to increase because when I seen the production volume, I think it was around 20,021 and it was 24,000 also. This year we haven’t had too much of volume growth and the utilization is also similar, so what is the capacity buildup increase that has happened.

Vinod Gupta — Chief Executive Officer

I think our capacity addition is taking place in two parts, where things on one part is, we are basically debottlenecking some of the plants with small investment and that’s where the capacity addition is happening, however our largest capacity addition has been on a herbicide, where we have actually increased our capacity from 300 tons a year to now 800 tons a year, and that was major investment in last year and that particular product we are hoping to more than doubling this year.

Ayush Mittal — Mittal Analytics — Analyst

But overall capacity, what is our overall stated capacity and how much have been increased on that.

Vinod Gupta — Chief Executive Officer

So overall capacity increase. I think if I look at there, because we normally declare from site-to-site. For for Derabassi, it has been roughly about 2000 tons during the last year. On the Lalru site, we have added this particular, one more intermediate where we will have an addition of capacity over 1,000 tons.

Ayush Mittal — Mittal Analytics — Analyst

Okay, so. Now the second part of the question that aspirationally we had been talking about going to be at least INR1500 crore turnover company and with much more improved margins. We are seeing that some of the delivery is not happening. And even on the margin side, we’re on the much lower end and we keep getting hit on that. So, first. How will that part happened because the capacity I don’t think so addition has been so much that we scale up to that point. And can you please shed more light on your roadmap, the timeline.

Vinod Gupta — Chief Executive Officer

So I think we basically have been talking about INR1500 crores. Obviously, last year has been tough because we started seeing the first the pricing and margin pressure starting from Q2 onwards and then towards the year end, anyway there was this inventory correction factor which came in. Now, obviously. I think, right in the beginning of call there was talk about three-four molecules which we have announced two years back, but that’s not a constant kind of a thing, because if I look at last year, we added one more fungicide where we did–it’s a 12 step process. Where we first did the laboratory trial, then we gave commercial samples of the one-time to the market. And now, currently we are in the process of making about 20 tons of that product to be delivered to the market. If all goes well, that product will gradually ramp up to maybe 200 tons to 300 tons in a years. So that kind of dynamic adjustments is what we are carrying out. We are confident that we will be able to deliver 20% to 25% growth year-on year. That’s one. Second, we are also seeing pressure on the margins. And that’s where we are now aggressively looking at improving our efficiencies, reducing our fuel cost, so that our EBITDA margins again go back to the numbers, which we had given in the previous year and may further improve. Shalil, you want to add anything.

Shalil Shroff — Managing Director

I think it’s perfect. So I think it’s very important for us is the focus as Vinod in his opening remarks, mentioned is R&D and I think the three-four products where we almost are dominating exports out of India and we believe we will do that. Okay, one or two products has been little low because of the correction, but I’m very confident and happy to share with all of you that the R&D team has done a fantastic job and you will see in the coming quarters when you see our numbers on a quarter-to-quarter basis.

Ayush Mittal — Mittal Analytics — Analyst

Okay, thank you and I’ll come back in the queue.

Operator

Thank you. The next question is from the line of Deepak Poddar from Sapphire Capital. Please go ahead.

Deepak Poddar — Sapphire Capital — Analyst

Hello. Yes, so first up I just wanted to understand in terms of inventory correction that you mentioned, right. So as we speak now that inventory correction scenario are we over with or there are further inventory correction that is happening.

Vinod Gupta — Chief Executive Officer

Okay, so. I think there are two parts, one is, when we talk about inventory correction, we are talking about inventory in the industry. In Punjab we don’t have any high-cost inventory. So there are not going to be any negative impact in terms of any raw material price correction or anything that we need to do. Second part, this inventory correction phenomena, if I look at it now sitting on 5th of May that is now sort of we see some signs of improvement and product movements have started, so maybe it will last for another two-three months. And then probably the most of the products will go to full scale.

Shalil Shroff — Managing Director

But just to add, like when you said inventory correction, to make it more clear. The products which did not move during Q4. During Q1 of this financial year have already started moving and we see we have been reiterating with the customers not only Europe, but the rest of the markets and, it’s going very good. The customer who was asking for one is asking for five again.

Deepak Poddar — Sapphire Capital — Analyst

Okay, understood. Yes, so I was also referring to inventory correction in industry only. So now with the current scenario, the margins that earlier we used to talk about was 18%-20%. I mean, so are we looking to kind of tweak the range, maybe somewhere on the lower side. Regarding the sustainable kind of margins that our business can see given the scenarios. So whenever we have talked of 18% to 20%, we have said that when we get into a product mix. And that would be post 25 because you’re are looking at higher products. Please understand we went through difficulty and now what products we are looking between $50,$100,$200, $300 per kg. A customer has looked at Punjab over the years, has looked at the balance sheet, has looked at our cash-flow, and they’re very confident. So these newer businesses would help us–would add to our margin and that’s where we should arrive, but talking of this year, we should be–I mean, our target is around between 14% to 15%, that’s what we are targeting for the financial year of ’23-’24. Exactly, 14% to 15%. But would this be fair to say that the margins that we have seen in the fourth-quarter, that’s the worst. I mean that has bottomed out. Given the things are on the improving trend as we speak in coming quarters.

Shalil Shroff — Managing Director

Yeah, as I said don’t please compare Q4. Q4 was again, inventory correction and also there were some unwanted. what we call, one time adjustment, which we have to do, but as we see moving forward there is nothing and we are back on track. So don’t judge us by the Q4. Moving forward, we are absolutely on track. The order book is on, we have discussed with the customers. And as I again repeat, our R&D is working very-very hard and as I said was happy to express that we will be to the fullest of our capacities. Having said that, talking to all our customers. Overall, moving forward is looking very robust.

Deepak Poddar — Sapphire Capital — Analyst

And the point that you mentioned, I missed that, what is the one-off adjustment in fourth-quarter.

Shalil Shroff — Managing Director

Well,this was primarily on account of provision for taxes, something which is below EBITDA.

Vinod Gupta — Chief Executive Officer

Before you some gentlemen had already asked. I don’t know where you were. Provision for taxation. Finance costs, one-off.

Deepak Poddar — Sapphire Capital — Analyst

No-no that I understood. No there is nothing else, there is nothing else.

Operator

Deepak. I would request you to please come back-in the queue. We’ll move to the next question from the line of Chirag Shah from White Pine. Please go ahead.

Chirag Shah — White Pine — Analyst

Thank you for the opportunity. Sir, before I ask the question, just a housekeeping question. Our receivables have gone up significantly, despite a flattish kind of revenue for any clarification you have, anything you would like to highlight.

Ashish Nayak — Chief Financial Officer

Yeah, basically, what had happened was in the fourth quarter, there were some sales that have happened, which happened in the month of March and as a result of it the receivables in absolute amount has gone up. So that’s the main reason, but there is nothing to worry, I mean, those are being recovered in due course.

Chirag Shah — White Pine — Analyst

And I have a slightly different question for you. If I take a step-back and if you look at last so many quarters, there have been some or the other disappointment, which has been happening either on the revenue front or on the margin front. And when I look at it, compare with some of your peer set who are in a sense comparable of business, we seem to have been affected more. So if you have to summarize your past so many quarters of experienced, how much is with respect to complete specific execution issues or were you overestimating. And how much has been specific to industry, that is what I think most of us are trying to understand because your outlook generally tends to be reasonably positive over six months out, but somehow something is not playing out for us. If you could break up, it would be helpful for us.

Shalil Shroff — Managing Director

I think, me and Vinod mixed would reply. I would just go back. As we did mention in Q1, Q2 calls that the fuel cost like [Indecipherable] for example what we had planned as per our EOP, the prices were high. Also, please understand that during that time they were monsoon where makes these [Indecipherable] wet. And then to use it the calorific value also goes down. And all our business, which we do with the customers is always fixed and at that time during Q1, Q2, because of. the cost in fuel, the cost of power, because there was a little power interruption also in Q1, Q2 and in which we had to use other sources of power and which was expensive and we could not pass that to the customer. We have reiterated to the customer. I think I’ve also spoken about this on the Q3 call and they have well understood and we have made it very clear to them that during the next coming years whenever this happens, we need to address it and rectify it.

Chirag Shah — White Pine — Analyst

I was more referring to the product side.

Vinod Gupta — Chief Executive Officer

Let me further add to it. So if I look at FY ’22,our revenue growth was part of two things, one is raw material price increase. And second is volume increase. Now 60% of last year’s growth. I mean when I say it, but it won’t be there, because we had grown about about 35%, 20% of that came from volume growth. This year, despite the last quarter being slow, we have actually been able to maintain same levels of volumes at an overall level. So as far as product volume is concerned, we have been able to manage our market-share. Now this is possible mainly because as the high prices were there sometimes as I think in earlier calls also, we said in certain cases, along with the our partner, we decided, okay, we will play the market share game when the market has stopped, so that when the market recovers, we are able to grow the market further. So that is one reason why we sort of have seen slight underperformance. Second reason obviously in terms of EBITDA, if you see the top-line because of the raw-material prices are higher, our margins are more or less fixed. In terms of percentage EBITDA, you will see a slightly lower number. If you adjust it for the raw material prices, our EBITDA is not hit so much as it gets reflected in absolute numbers.

Chirag Shah — White Pine — Analyst

My question was more with respect to the the product delays that we have seen or the revenue projections or expectations that you are having from new products, there it will flow from the from the customer. Okay, even there we have seen some delays, some lag. So again, it’s more driven by industry. And not end customer we see or some other challenges at product level itself. I know the registration issue that you have been highlighting since last 12 months, there have been delays in registrations, which is beyond your control, I’m aware of that.

Vinod Gupta — Chief Executive Officer

So I think what Shalil sir has already said earlier that there was some issue related to registration which resulted into delay. One product where we had forecasted some growth that is more around market phenomena, which now again we have restarted and I think this year, as I said earlier, this is a product where we will double the volume in the coming year, that’s the kind of projections we are getting from the customers based on market assessment.

Chirag Shah — White Pine — Analyst

And sir, last question if I can, just seen in the past you have been even alluding to your aspiration to build a INR2,500 crore- INR3,000 crore of order book in Phase-II. I believe there would be some delays. I understand, given the market situation, but that aspiration still stays or that get pushed out to a much longer time duration.

Shalil Shroff — Managing Director

No, no very much. I think as I’ve always spoken that our customer base is very-very strong and with every customer we have already signed contracts that how we can take this $1 to $3 to a $5 to $10, so we are very positive and the way we have discussions. The way we have MoU is the way we have long-term understanding with the customers. We are very much on track.

Operator

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

Rohit Nagraj — Centrum Broking — Analyst

Yeah, thanks for the opportunity, sir. My first question is a generic question. So we have also alluded that in terms of inventories for Punjab Chemicals in the channel, we are relatively having galore inventories and generally all the listed companies have also alluded to the same, that their inventories in the channel are lower, so who has filled up the channel over the last maybe couple of quarters. And other question being that. I mean other factor being that China was also not very active during the last couple of quarters. So just a generic understanding from your side from the industry perspective. Thank you.

Vinod Gupta — Chief Executive Officer

So. I think as far as who is holding the inventory that’s inventory, because if you look at mainly from the export market, it’s lying somewhere overseas. So, probably you will not see much with the Indian player and that’s the same case with us also. Coming to your second question, sorry I forgot the question. Can you repeat your second question.

Rohit Nagraj — Centrum Broking — Analyst

Yeah. I mean, since China was not there in the last six months. So why there has been such a high inventory in the system, both domestic as well as, to some extent in global as.

Vinod Gupta — Chief Executive Officer

This inventory build-up was happening over the last two years, where people were not sure about supply-chain. So at any time. There was because there was a frequent lockdowns happening in China. And China is still being a major player. People were sort of concerned that one fine day China stops when they will not have the product available. So that’s where the buying continued continuously with a worry of disruption in supply chain. Now, with China opening up with market getting slight confidence that probably those kind of incidents won’t take place. I think the industry has sort of loaded inventory has correcting it. Now with China, opening up has to kind of impacts one obviously with the product price go down, but at the same time raw material prices also go down. And as the raw material prices go down, we will again be more competitive, and that will further boost our growth because we have actually been able to sustain our market-share during the last two years in a market.

Shalil Shroff — Managing Director

And just to add, the other thing which we do and we feel very proud about it is that our dependability on China, we want to get away, and that’s where few of our main products, AI, active ingredients, which we make. We have developed. Domestically, the sources for these raw materials. So we do not rely so much. And overall, also, the customers are now looking at that, how much is your dependability on China, how much are you doing within yourself and India, we at Punjab cannot do everything but we partner up also with good companies and that’s why has played a very positive among the customers and that’s where we see and that’s where I think the question was asked by the the gentleman that are you worried. And yes, we’re very confident, because we know the products which are in pipeline. What we have not only looked at the product, but we have looked at the downstream raw materials also. Other than maybe we take a fixed cart from buying from Europe, China and elsewhere, but eventually, we are also looking at having it mainly in India.

Operator

Sorry to interrupt, it is not coming through. Rohit I would request you to please come back in the queue. The next question is from [Indecipherable] from ITI Mutual Fund. Please go ahead.

Analyst — ITI Mutual Fund — Analyst

Yeah, thanks for the opportunity. Two quick questions. You have enumerated, the pipeline, which looks exciting. Out of which four is likely to contribute. So, in your sense, what could be the total size of opportunity if, let’s say, if one kind of assumes that the entire pipeline is available today for monetization.

Shalil Shroff — Managing Director

I did mention INR1500.

Analyst — ITI Mutual Fund — Analyst

So that 1500 incremental is from mainly this pipeline of new 15 products.

Shalil Shroff — Managing Director

That’s right. Out of that, maybe between 15% to 20% would be within the existing products, and enhanced capacity and the balance is coming from new products. In terms of breakup between AgChem and intermediate. Major would be AgChem.

Analyst — ITI Mutual Fund — Analyst

Okay. And secondly. A couple of questions have already been asked by various participants. Just to delve a little bit more on that. Specifically, last two or three quarter, is it that one or two large customers have not–basically, kind of normally you would be doing a volume contract. Sort of take or pay. And with certain cost benchmarks or index or whatever. And you had alluded that except for the power cost and in certain cases, a few raw-material which got out of hand. We were almost there, so specifically in light of Q4, are we taking steps to further tighten our contract, so that we don’t face such kind of great surprise.

Shalil Shroff — Managing Director

Yeah, as I did mention that Q1, Q2, because of the cost and power and other thing and we already in contract, so as I said, we have reiterated to the customers and because this uncertainty also if it goes beyond a point. So we have addressed it and we are in sync with the customer.

Analyst — ITI Mutual Fund — Analyst

You have kind of taken all the nuances into consideration which can possibly impact us and beyond the plus-minus percentage the client should be willing to bear whatever.

Shalil Shroff — Managing Director

That’s right for the coming financial year that is ’23-’24. And moving forward.

Analyst — ITI Mutual Fund — Analyst

And lastly, as an associated question you mentioned INR1400 crores-INR1500 crores. And also, the underlying is that about 20%-25% growth. To achieve this, what is the incremental CapEx spend that you foresee in the next two or three year including the multipurpose and the power correction that you wanted to.

Vinod Gupta — Chief Executive Officer

So I think year-on-year we have been investing both in asset renewal as well as capacity addition. Now, the way we see the next year. Obviously, the investment will be one to reduce our energy cost. Two, to increase our capacity, so that some of these products that we have mentioned it can meet the requirement for next two to three years. Post that, actually what we are looking at is we are looking at it comprehensively across the product basket and we will have a significant investment. Starting maybe somewhere in Q3 of this year for next 12 months to add significant to our capacity, we’re still working on that plan. So the plan for the year to capitalize some of the opportunity that we have highlighted in our presentation is already in place. However, the bigger investment, which will be sort of a large investment will kick off in Q3 of this year and that project duration will be about 12 to 15 months.

Analyst — ITI Mutual Fund — Analyst

If I guess it would be NPP. So you would need to spend that possibly at Lalru, because Derabassi is almost full. Or does it involve third kind of plant.

Vinod Gupta — Chief Executive Officer

We’re looking at all the opportunities, but. I think you got that right. It will be mostly at Lalru but we are looking at other opportunities. Also, because beyond a particular point even Lalru will get saturated. So that activity will also be undertaken in this year.

Analyst — ITI Mutual Fund — Analyst

Okay, great, great. Thank you so much.

Operator

Thank you. Ladies and gentlemen. In the interest of time, we request you to please limit your question to one.

Shalil Shroff — Managing Director

I think let’s take one more question and then because we have another call in the next half an hour.

Operator

The next question is from the line of Satish Pandya from Girik [Phonetic] Capital. Please go ahead.

Satish Pandya — — Analyst

Yeah, hi sir. Sir, just one question. So in the initial commentary, you mentioned that you will start signing formal contracts, let’s say, 24, so could you elaborate on that. What do you need. So would it be different than what we were doing in the past because of the size of the contracts, the kinds of molecules. Yes, some bit of light on that.

Vinod Gupta — Chief Executive Officer

See in the actually last nine months, we are actually having at least one visitor from overseas or Indian companies to our factory more or less every fortnight. So this has been discussing very specific products specific molecules. And these have now reaching a stage where we have discussed the products, some products if it is a technology transfer, documents have been share NDAs have been signed, in some cases where we were supposed to develop the product we have developed. Now in next few months, those will get some sort of formalized. And that’s the statement I made in my opening remarks that whatever groundwork that we have done in last nine to 12 months that will start fructifying. And it will be formal contracts, multi year contracts with take or pay clause with raw material, all other clause are sort of clearly marked out in the agreements.

Satish Pandya — — Analyst

So such business has transacted in our recent history for the company. Right.

Vinod Gupta — Chief Executive Officer

We have done one. I think one Japanese company we started this product about about 17-18 months back. So that is already going on and one more contract we signed. now some more are in pipeline.

Satish Pandya — — Analyst

Okay and in terms of complexity. How would you rate the future contracts.

Vinod Gupta — Chief Executive Officer

These will be. I think multi-step processes. For example. I think I gave an example of one-product. There is a 12 step process.

Satish Pandya — — Analyst

Yeah, Fungicide, you mentioned.

Vinod Gupta — Chief Executive Officer

Yes, fungicide. Similarly, most of these products will be in minimum five to seven steps. So these are not single steps, these are minimum mostly five, seven steps, but it’s more in synergy with the chemistry that we do right now. Obviously, we are looking at new chemistries also. But at the moment, it is more around synergies with our chemistry, but it’s a multi-step process. Also in lot of these cases, we are looking at backward integration, either within our factory or within India. So that the supply-chain sort of remain secured from any shocks that come from any other market.

Satish Pandya — — Analyst

Okay just one clarification, you mentioned about the new products, did I hear it correctly. That we’ll be looking at $50 to $300 product basket range versus the current might be a much lower than that, is it right.

Vinod Gupta — Chief Executive Officer

That’s right.

Satish Pandya — — Analyst

Okay, okay, so higher would be a better, like more complicated product and a better margin.

Shalil Shroff — Managing Director

I think as Vinod said that every step or any reaction I would say we do, you determine your safety parameters, health, safety, environment, which is very-very important. You have to base on that. And now with the balance sheet size and all, where we have products between $20, $30, $40 a kilo, we’re looking at $60, $70 up to $300 a kilo.

Satish Pandya — — Analyst

Okay, okay, thank you very much and good luck. Thank you.

Operator

We’ll take the last question from Rohit Nagraj from Centrum Broking. Please go ahead.

Rohit Nagraj — Centrum Broking — Analyst

Yeah, thanks for the follow-up. Sir, just taking your comment on the China factor and inventories coming into the system. So you alluded that in FY’22 whatever volumes we did, we were able to keep those volumes in FY ’23 and given that now China has come into the system and probably will have generic market globally, what is the factor which go wrong in terms of achieving our targeted growth of say 20%-25% and which might have some derailment or postponement of our growth. Thank you.

Vinod Gupta — Chief Executive Officer

Okay, so. I think China is both–though we are trying to develop local suppliers, where China is both a supplier of raw material and a competitor in the market. So the supply situation easing out. In fact, we are in a better position to capture the market because our processes are competitive. Of course, our energy costs have been higher, that we will be conducting during the year. So we probably will be either at the same level of market share or maybe we will increase. Now, that’s a continuous dialog that we have with our customers. In terms of how to make sure that we stay competitive and maintain the market share, so I don’t see that as a negative. And in fact even in normal market conditions maybe, our performance will be better.

Shalil Shroff — Managing Director

And just to add even where we had product registration in Latin America where we started with 20%, we are now almost up to 55%-60%, and we believe next year we should be between 70%-80% main competitors are Chinese.

Rohit Nagraj — Centrum Broking — Analyst

Thanks sir. Got it, thanks a lot for answering all the questions and best of luck sir.

Vinod Gupta — Chief Executive Officer

Thank you all of you for joining us.

Operator

[Operator Closing Remarks]