Sharda Cropchem Limited (NSE:SHARDACROP) Q4 FY23 Earnings Concall dated May. 12, 2023.
Corporate Participants:
Ramprakash V. Bubna — Chairman and Managing Director
Ashok Vashisht — Chief Financial Officer
Unidentified Speaker —
Analysts:
Darshita Shah — Antique Stock Broking Limited — Analyst
S Ramesh — Nirmal Bang Securities — Analyst
Dhruv Muchhal — HDFC Mutual Fund — Analyst
Darshil Zaveri — Crown Capital — Analyst
Sameer Deshpande — Fairdeal Investments — Analyst
Himanshu Binani — Prabhudas Liladher — Analyst
Resham Jain — DSP Asset Managers — Analyst
Archit Joshi — B&K Securities — Analyst
Rohit Nagraj — Centrum Broking — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Sharda Cropchem Q4 FY ’23 Earnings Conference Call hosted by Antique Stock Broking. [ Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Darshita Shah from Antique Stock Broking. Thank you and over to you ma’am.
Darshita Shah — Antique Stock Broking Limited — Analyst
Thank you. Good evening everyone and on behalf of Antique Stock Brokingt, I would like to welcome all the participants in the fourth quarter and FY ’23 earnings call of Sharda Cropchem. On the call with we have Mr. R.V. Bubna, Chairman and Managing Director; Mr. Ashok Vashisht, Chief Financial Officer; with that with further adieu I would like to hand over the call to Mr. Bubna for openings remarks, post which we will open the floor for Q&A. Thank you. And over to you Mr. Bubna.
Ramprakash V. Bubna — Chairman and Managing Director
Thank you Maam. Good evening and a warm welcome to everyone present here on the call. Along with me, I have Mr. Ashok Vashisht, our Chief Financial Officer and Mr. Dinesh Nahar, General Manager, Finance. And as SGA team of our Investor Relations on the call. Hope you all have received our investor deck by now. For those who have not, you can view the same on the stock exchanges and the company website. We are a global agrochemical company engaged in the process of marketing and distribution of agrochemicals by procuring wide spectrum of formulations and January active registrations across the globe. Leveraging on our export expertise and product registration capabilities by identifying generic molecules, repairing those dossiers seeking registrations, marketing and distributing. The company continues to identify opportunities in generic molecules. Sharda Cropchem total product registrations spend at 2821 as on March31, 2023.
Additionally. 1,143 applications of the product registrations are in pipeline. The capex for the financial year 2023 stood at INR355 crores. Every jurisdiction has different legal and procedural requirements for providing registrations. The company has successfully obtained the regulatory approvals from these jurisdictions. The company is well equipped to respond to all the potential issues as well as has the readiness to efficiently respond and comply with regulatory requirements. We maintained our healthy relationship with multiple manufacturers mainly in China and India. Sourcing from multiple manufacturers helps the company in getting quality products at optimal price. Thereby derisking it’s sourcing dependencies.
Over the years we have built a strong network within our global markets. We are benefiting to the economies of scale and leveraging value of our supply chain to deliver value to the customers. In Q2 in Q4, quarter four 2023 the revenues grew by 3% to INR1,482 crores and for the full financial year the revenues have grown by 13% to INR4,045 crores. The revenue growth led by better product mix and price realizations during 2000 Q4′ 23, the gross margins have improved by 240 basis-points due to increased sales in Europe and better margins.
Most of the currencies have depreciated against the US dollars in the first six months of the financial year due to which — mainly due to the ongoing war between Russia and Ukraine. In the first half of the year, the company incurred forex losses of INR82 crores. In the last two quarters that is second half of the year, we have seen some rebound of these currencies. For the full-year, the company has incurred a forex loss of INR58 crores due to favorable movement or INR25 crores in the last two quarters. Over 53% of our FY ’23 sales of agrochemical business had been to Europe, where the majority of the company’s raw materials is imported from China and the payments are done in US dollars. This had impacted the company’s gross margins and overall profitability in first half of’ 23. We have seen this trend reversing in the second-half of FY ’23 as euro has started appreciating against dollar and rupees. We have accelerated focus on revenue generating investments. INR continually looking to improve the operational efficiencies which will help improve our margins. With this brief overview, I would now like to hand over the call to our CFO, Mr. Ashok Vashisht for discussing our financial performance. Thank you very much, ladies and gentlemen. Now, I give it to Mr. Ashok. Thank you.
Ashok Vashisht — Chief Financial Officer
Thank you sir. Good evening Sir, everyone over the call. Coming to Q4 FY ’23 performance, revenue stood at INR14.82 billion against INR14.34 billion in Q4 last year thereby registering a growth of 3% year-on-year. The company is focusing on value based growth. Gross margins stood at 31.6% in Q4 FY ’23 against 29.2% same quarter last year, higher by 240 bps mainly due to increased sales in the European region and better margin in Europe and rest of the world. The EBITDA margin stood at 21% at [indecipherable]crores in Q4 FY ’23. Let’s see, INR317 crores in Q4 FY’ 22. Profit after tax stood at INR199 crores against INR169 crore Q4 last year existing the growth of 18%. PAT was supported by better product mix and price realization and post impact of on forex gain.
Coming to the debt. Agrochemical business grew by 6% year-on-year to INR13.6 billion whereas the non-agri business grew by 13% year-on- year to INR166 crores. In the Agrochemical space Europe grew by 46%, NAFTA de-grew by 37% LATAM de-grew by 58%, whereas sales in the rest of the world grew by 88%.
In total, Europe continued 68%. NAFTA 23%, LATAM 4% and ROW 5% of the agrochemical business for Q FY23. In the non-agrochemical space Europe de-grew 64%, NAFTA region marginally grew by 1%, LATAM de-grew by 50% and ROW grew by 78%. Europe contributed 12%, NAFTA 67%, LATAM 3% and ROW 18% of the known agribusiness for Q4 FY ’23.
Now coming to our full-year performance FY ’23 revenue stood at INR4,045 crores for the full-year FY’ 23 against INR3,580 crores. Last year FY ’22, registering a growth of 13% year-on-year. Having growth on that by better pack mix and better price utilization. Gross margin stood at 29.3% in comparison to 30.2% in FY ’23. So if we compare this from the first-half of the year, marginal full-year. So, we have nearly grew by 300 bps in H2, both in H1. EBIDTA de-grew by 2% to INR713 crore and PAT stood at INR342 crores versus INR349 crores FY’ 22. Coming to the split of agri chemical business. Agrochemical business grew by 11% year-on-year to INR33,348 crore whereas non agro business grew grew by 21% INR697 crores. In the Agrochemical space, Europe grew by 29%, NAFTA region de-grew marginally by 2%, LATAM de-grew by 24%, and rest of the world grew by 34%. In Agrochemical business, Europe contributes 53% for full-year NAFTA 34%. LATAM 7% and rest of the word 6%. In the agro business chemical space, NAFTA grew by 47%, LATAM grew by 35%, rest of the world grew by 23% and the Europe de-grew by 24%. Europe contributes 20% of the total loan agro business, NAFTA contributes 61%, rest of the world contributes 14% and LATAM 5%. In terms of working capital, as on March 31, 2023, in terms of days, it’s 104 days. We are a net cash company. Our cash-and-cash liquidity stood at INR328 crores as on March 31, 2023 key and total debt stood at INR3 crores. With this so we are now keeping the floor open for questions. Thank you very much.
Questions and Answers:
Operator
Thank you. Ladies and gentlemen we will now begin the question-and-answer session.[Operator instructions] Ladies and gentlemen we will wait for a moment while the question queue assembles. The first question is from the line of [indecipherable] professional investor. Please go ahead.
Unidentified Speaker —
Hi, thanks for the opportunity. My first question is regarding our property plant and equipment shown in the balance sheet. I think this is reduced from INR14.4 crores FY’ 22 to INR5 crores in FY ’23. Can you tell what did we sell that has resulted in a reduction of this.
Ashok Vashisht — Chief Financial Officer
Yes, yes, one minute. This is essentially the led asset, which has no as far in -line with [indecipherable]. So depreciation has come down like this. Mainly due to depreciable lead assets.
Unidentified Speaker —
Okay. My next question is about our working capital if we see like, we have seen a bit of an increase in our working capital. Can you tell the reasons behind it.
Ashok Vashisht — Chief Financial Officer
Yes. Two reasons, one is, Q4 is 45% of the business coming into the Q4, but having said that, so there are in terms of inventory we have certain challenges in the NAFTA region, so which has temporarily led to the little higher working capital. And barring that we are in line with similar last year. So essentially growth was mainly in NAFTA region.
Unidentified Speaker —
And is there also a possibility that we might have to write-off a bit of our inventory in NAFTA region. If it doesn’t get side.
Ashok Vashisht — Chief Financial Officer
Not region, it’s just because of temporary demand issues led by the weather conditions. So as of now, we do not foresee any such kind of listing for write-off.
Unidentified Speaker —
Okay. And can you just tell us a bit about broader agrochemical scenario, it seems that there is a lot of inventory in the channel and number of companies are struggling in terms of growth, can you just give a basic outlook of the industry.
Ashok Vashisht — Chief Financial Officer
This agrochemical industry is a seasonal business and very much dependent upon the weather. This year coincidentally NAFTA region is facing a lot of hardship. And whatever was planned has not been able to taken off or given it to the agriculture because of adverse weather conditions. Otherwise, things are very much normal and there’s not much things to worry about.
Unidentified Speaker —
But you also seen that we have pressure in the..
Operator
Sorry this is the last question — may we request that you responds. Thank you. The next question is from the line of the [indecipherable] an Individual Investor. Please go-ahead.
Unidentified Speaker —
Congratulations Mr. Bubna gi for the very good set of numbers. My question [Foreign Speech] interest rates [Foreign Speech] sir, thank you.
Ramprakash V. Bubna — Chairman and Managing Director
Sir. In case [Foreign Speech] except that if there is a cross currency exchange rate variation then that impacts our business. As was explained in the speech of Mr. Ashok Vashisht our sourcing is almost 90% in US dollars. And sales are in local currencies globally mainly Europe in euros and Canada in Canadian dollars and all those things. So these currency depreciated against dollar. Then it has an adverse impact on our business and if they appreciate, then we get a benefit. Interest rates in my opinion does not impact our business much.
Unidentified Speaker —
Sir, pricing pressure be [Foreign Speech].
Ramprakash V. Bubna — Chairman and Managing Director
See prices are guided by two or three factors. In our case, the sales prices are guided by the multinational companies and innovators, who are the innovators of these molecules. And the second factor is cost of sourcing. This is mainly China and India. This due to manufacturers in China. The prices of our inputs, raw materials and technical products vary because of the local situations in China. In the first half of this year, the Chinese situation was not so comfortable and the prices were high. In the last quarter of this year, Chinese prices are on the down slide, and that will have a positive impact on our business.
Unidentified Speaker —
Okay sir. Thank you sir. Thank you very much.
Operator
Thank you. The next question is from the line of S Ramesh from Nirmal Bang Securities. Please go ahead.
S Ramesh — Nirmal Bang Securities — Analyst
Good evening, and thank you very much Bubna Ji. My first thought is if you’re looking at the decline in input costs and the pressure on margins. Do we see any risk of some pressure on margins before we see the recovery in margins because you will obviously be able to pass on the lower cost and improved demand, so how do you see the output from margins, given that there is an overall reduction in the topline as well as normal.
Ramprakash V. Bubna — Chairman and Managing Director
Mr. Ramesh. This is a mixed situation. In some of the territories where we have some inventories. It will have a pressure on the margins, because everybody is looking at the prices in origin that in China. But a lot of our categories, we do not have such inventories. So there we are getting benefited.
S Ramesh — Nirmal Bang Securities — Analyst
Okay, on the receivable side, it’s gone up. It’s for almost between five and six months. So do you see that coming down in the foreseeable future, or will this continue for a while. What do you say that.
Ramprakash V. Bubna — Chairman and Managing Director
It should improve the receivables should improve, because our business being seasonal business. Big chunk of our sales are happening in the fourth quarter and in the last month of the financial year, mainly because of the spring season coming closer to the closing. So initially in the, for every financial year our receivables are at the top and then they start going down and I don’t think any big impact will be there on account of higher receivables.
S Ramesh — Nirmal Bang Securities — Analyst
Sir, one last thought. So if you look at third quarter and during in the Rabi season lot of generic competition even they are leading companies, they are under pressure, so. Where do you see the industry kind of settling will you see some improvement in volume in the Caribbean, in the international market the next six months particularly in Asia and other markets where we have agricultural season or will it take another one year before we see the overall outlook for consumption growth improve, what is your thought on that.
Ramprakash V. Bubna — Chairman and Managing Director
No I don’t think we have to wait for a year. Impact will start within next three to six months. And it will be gradual.
S Ramesh — Nirmal Bang Securities — Analyst
Thank you very much and wish you all the best. I will join the queue.
Ramprakash V. Bubna — Chairman and Managing Director
Thank you.
Operator
Thank you. The next question is from the line of Dhruv Muchhal from HDFC Mutual Fund. Please go-ahead.
Dhruv Muchhal — HDFC Mutual Fund — Analyst
Hello sir. Thank you so much. Can you give the volume price and FX split for the quarter.
Ramprakash V. Bubna — Chairman and Managing Director
Revenue growth for quarter.
Dhruv Muchhal — HDFC Mutual Fund — Analyst
Yes sir.
Ramprakash V. Bubna — Chairman and Managing Director
One minute.
Dhruv Muchhal — HDFC Mutual Fund — Analyst
Sir, you want to give full-year.
Ramprakash V. Bubna — Chairman and Managing Director
Hello yes. The impact on the growth is plus 2% because of the product and price mixture. Volume growth has been a negative impact of 3%. And foreign-exchange impact has been about 4.3% total growth is 3.3%.
Dhruv Muchhal — HDFC Mutual Fund — Analyst
And sir, same for the full-year. If you have.
Ramprakash V. Bubna — Chairman and Managing Director
Same for.
Dhruv Muchhal — HDFC Mutual Fund — Analyst
Full-year full-year the FY23.
Ramprakash V. Bubna — Chairman and Managing Director
One minute. Full-year. The impact of price and product mix is plus 15%. Volume, minus 4.6%. Foreign-exchange impact, plus 2.5%. And total growth 13.0%.
Dhruv Muchhal — HDFC Mutual Fund — Analyst
Sir, how do you look at the growth for the next year. I’m also asking in context, we are seeing that you also you mentioned that technical prices from China are lower now. And last two, three years we had would benefit in revenue growth because of pricing. So do you think that reversing and having can cause some drag on revenue growth for the next year.
Ramprakash V. Bubna — Chairman and Managing Director
No, not very much. I think we should grow around 15%, 15% to 18%.
Dhruv Muchhal — HDFC Mutual Fund — Analyst
Sir, this will be largely driven by, because if I’m not wrong price to negative there would be some delta negative because of price. So do you think volume will offset that negative impact.
Ramprakash V. Bubna — Chairman and Managing Director
No volume will increase when the prices on the drop, the volume increases. Demand increases.
Dhruv Muchhal — HDFC Mutual Fund — Analyst
All right. Just sorry, sir. But the the impact of the benefit of price in the last two years has been reasonable. For you itself I think the growth has been 25% in FY, one second, was about 25% in FY22 and 15% in FY23, driven by pricing. And we see that technical prices are coming off in China. So just wanted to reassure that, you still are comfortable with shifting net growth.
Ramprakash V. Bubna — Chairman and Managing Director
Yes, we are comfortable sir.
Dhruv Muchhal — HDFC Mutual Fund — Analyst
And this, your inventory is just coming back to that question earlier. Your inventories, sir we understand prices have fallen significantly like glyphosate have fallen, probably more than half, so we don’t see that as the risk of inventory write-off on us that we are very confident about.
Ramprakash V. Bubna — Chairman and Managing Director
There will be some, let’s say some small impact, but not very significant. Only in the territories where we are left with inventories and those happened because of adverse weather conditions and drop of demand. But on the other side, where we don’t have much of an inventory, we will have benefit also.
Dhruv Muchhal — HDFC Mutual Fund — Analyst
Okay, so that’s primarily the increase in inventory that we see versus normalized, normally you have about 60, 70 odd days of inventory, this time it is about 90 odd days. So this is primarily because of NAFTA only, for the regions you’re fairly comfortable.
Ramprakash V. Bubna — Chairman and Managing Director
Mainly, yes, mainly because of NAFTA.
Dhruv Muchhal — HDFC Mutual Fund — Analyst
One last question is on the capex guidance. So what could be the number for FY24 and when you say capex do you also include the registration cost which you partly expense out in your P&L.
Ramprakash V. Bubna — Chairman and Managing Director
No, we are capitalizing the capital work-in progress when we receive the registration. And then we start depreciating them or by straight-line method over a period of five years.
Dhruv Muchhal — HDFC Mutual Fund — Analyst
Sir, why I’m asking this is because in your commentary you mentioned the capex is INR355 crores, but if. I look at the cash-flow statement the amount is if I’m not wrong, only to INR244 crores. So I’m just trying to understand what is the difference. Is that 100 crores booked in expenses and you are seeing it that way.
Ramprakash V. Bubna — Chairman and Managing Director
One minute. So, Dhruv, but happens capex, whatever we incur, it doesn’t mean every, all the cash-flow Dhruv happen in the same. So they have..
Dhruv Muchhal — HDFC Mutual Fund — Analyst
That’s the difference.
Ramprakash V. Bubna — Chairman and Managing Director
Hopefully closing creditors and…
Dhruv Muchhal — HDFC Mutual Fund — Analyst
Got it.
Ramprakash V. Bubna — Chairman and Managing Director
Do that in capitalized depreciation, yes.
Dhruv Muchhal — HDFC Mutual Fund — Analyst
So the capex for this year will be about what sir in FY24.
Ramprakash V. Bubna — Chairman and Managing Director
Around INR400 crores.
Dhruv Muchhal — HDFC Mutual Fund — Analyst
INR400 crores, sure sir, thank you so much sir and all the best, thanks.
Ramprakash V. Bubna — Chairman and Managing Director
Thank you.
Operator
Thank you. The next question is from the line of Darshil Zaveri from Crown Capital. Please go ahead.
Darshil Zaveri — Crown Capital — Analyst
Hello, good evening, sir and thank you for taking my question. Firstly, congratulations on a great set of results. Sir my question was regarding margins, so with lower prices, would that impact our EBITDA margin. And how would our EBITDA margin play going-forward in the next year.
Ramprakash V. Bubna — Chairman and Managing Director
See, our EBITDA margins is projected, as between 18% to 20%.
Darshil Zaveri — Crown Capital — Analyst
Okay, between 18% to 20% for next year. Okay, so this would — basic forex expense that we could reasonably estimate would be included in this. Or could there be any other risks that we see for getting towards this margin.
Ramprakash V. Bubna — Chairman and Managing Director
No, we have taken all the risks into account when we have projected this 18% to 20%.
Darshil Zaveri — Crown Capital — Analyst
Okay. That’s helpful. Thank you for answering.
Ramprakash V. Bubna — Chairman and Managing Director
Thank you.
Operator
Thank you. I think the next one is from the line of Sameer Deshpande from Fairdeal Investments. Please go-ahead.
Sameer Deshpande — Fairdeal Investments — Analyst
Hello. Congratulations on the very good set of number because the we started the year on a very difficult note, but in the half-two we have covered the entire loss which was incurred in the half-one, really it was, it is a commendable job and so congratulations Mr. Bubna and the team for their hard work.
Ramprakash V. Bubna — Chairman and Managing Director
Mainly to the teams sir.
Sameer Deshpande — Fairdeal Investments — Analyst
Yes, yes, but it is under your stewardship so it goes to you also. But this year we are hearing a lot of noise about the El Nino and the weather conditions being adverse, not only in Asia, but also abroad. So, because in large companies conference call we heard and the product prices have also fallen and after China’s reopening the prices of the products have fallen significantly in this quarter, reopening of China. So actually does it benefit us in anyway.
Ramprakash V. Bubna — Chairman and Managing Director
It has a mixed impact. See, Mr you are Mr Sameer Deshpande. As I explained, because of a very healthy relationship with the suppliers and manufacturers, we get the advantage of the drop-in the prices. We are the first to get the advantage. And the advantage takes some time to be passed on to various levels. So during the intermediate period we had we get benefited. You understand. When the prices go down, our business gets positively impacted.
Sameer Deshpande — Fairdeal Investments — Analyst
Yes surely. And only there being weather issues at this point, we don’t feel any much adverse.
Ramprakash V. Bubna — Chairman and Managing Director
I still remember the word you have said for this, whether you hear lot of noises. You should not say instead of the noises. You’ve used the right work, these are all noises.
Sameer Deshpande — Fairdeal Investments — Analyst
Okay.
Ramprakash V. Bubna — Chairman and Managing Director
So, the world is going to stay. People are going to eat, people are going to live. So, is required agriculture and the population is growing. As agriculture has become so resilient, we can withstand lot of noises.
Sameer Deshpande — Fairdeal Investments — Analyst
And I was just going through all that data which we have provided for last about four years consecutively. For FY18, FY19, I’ve seen the sales have grown from 2000 to 4000, so it is a growth of 100%, so which is a good growth of more than 20% CAGR, and our operating profits and net profit also have grown about 18% to to 19% AGR over the last four years. So that is really a good thing and hope this is continuing the same way. I had a question about this before, our other expenses have shot up from INR107 crores to INR147 crores. So what is the– any one-off in that.
Ramprakash V. Bubna — Chairman and Managing Director
Sir this is mainly due to increase in the cost of living and significant increase in the cost of living in the European region. And this has happened because of the Russia – Ukraine war. The cost of fuel going up, energy going up transportation going up, the surface transport is extremely high in Europe nowadays. And these are adding. And then also our consultants, we have a max amount of consultants coming out from Europe. So Europe has been a very stable economy for the last many decades. This is the first time that they are getting impacted because of all these things. But they’ll find a way out. Everything has short life. This Russia-Ukraine was was never expected to last so long, but is still going on.
Sameer Deshpande — Fairdeal Investments — Analyst
But now I think the overall effects are fading,
Operator
I’m sorry to interrupt Mr Deshpande day may we request that you return to the question queue, there are participants waiting for their turn.
Sameer Deshpande — Fairdeal Investments — Analyst
Thank you and I’ll join the queue.
Operator
The next question is from the line of Himanshu Binani from Prabhudas Lilladher. Please go-ahead.
Himanshu Binani — Prabhudas Liladher — Analyst
Thank you. Thank you sir for taking my question. So my question was largely on the revenue and margin outlook going forward. So what we have seen in the global agrochemical companies still date who have reported their numbers. So, the major thing or the common thing which was coming out is that the generic players were facing an immense pressure across geographies. But despite that we have actually booked that trend and we have posted a decent sort of like growth into the agrochemical. So what what different we have done basically as compared to the other players or the global majors, number-one. And secondly, what we have seen is there has been a huge margin erosion also across names. But despite that we have like, we have posted a very decent sort of like gross margin expansion during this quarter. So, the question was largely around this only sir. So maybe, you can.
Ramprakash V. Bubna — Chairman and Managing Director
Mr Himanshu. You have to see our business model. Our business model is very unique. It is not like other generic players who are sitting with lot of fixed assets, manufacturing facilities and they have to live with those manufacturing facilities even if the demand for the normal products go down. We are very nimble footed. If any product has less demand and less margins, we try to put that on the side or give it the last referencing. We have, wherever we find that the margins are good demands are good, we pay attention to that molecule or that product and leave aside, like you said glyphosate. Glyphosate prices were very high, now it is going down and the prices go down. We give least importance to this product as the manufacturer cannot avoid them. They have to live with them. So that’s a very big difference between other generic players and our business.
Himanshu Binani — Prabhudas Liladher — Analyst
Great. And sir, secondly on the margin side. So have we taken any sort of like high-cost inventory provision into our numbers and which is reflected into the gross margins despite this 240 basis-point of margin expansion.
Ramprakash V. Bubna — Chairman and Managing Director
Sir we have taken into account whatever inventory we have today. Now, you it high-cost or low-cost, but the overall cost of those inventories are not significantly high as compared to the current prices.
Himanshu Binani — Prabhudas Liladher — Analyst
Got it sir. So sir, how should actually want look at the gross margin profile in FY24, so we continue to maintain that 26% to 30% sort of range in the gross margin.
Ramprakash V. Bubna — Chairman and Managing Director
Yes sir, yes, sir. We are very comfortable, it could be nearer to 30%. 26% was in the first-half of this year mainly because of the exchange rate variation.
Himanshu Binani — Prabhudas Liladher — Analyst
Right. So going forward sir with the now the forex turning favorable and moreover the RM prices are like correcting. So are we like not, are we like giving a conservative sort of guidance into the gross margin side.
Ramprakash V. Bubna — Chairman and Managing Director
Sir we prefer to be practical, we don’t prefer to very optimistic. We know that we have to face our investors every three months. Right. So we like to give as realistic and estimate as possible. You can it optimistic or pessimistic.
Himanshu Binani — Prabhudas Liladher — Analyst
Right sir. And, sir, one last question, basically. Can you please help us with the gross margin region-wise, gross margin as well as the volumes for this quarter and for the full year FY3, thank you.
Ramprakash V. Bubna — Chairman and Managing Director
Yes, sir. Region-wise gross margins have been 36% in Europe, Latin-America 26.5%, NAFTA 24.5%, and rest of the world 22%.
Himanshu Binani — Prabhudas Liladher — Analyst
Got it sir.
Ramprakash V. Bubna — Chairman and Managing Director
As usual, Europe has been the best. Margin and very regular regularized, regulated market. And very little fluctuations in.
Himanshu Binani — Prabhudas Liladher — Analyst
Sir, LatAm, we have seen a decline, a huge contraction in the revenues. However, we are seeing a huge expansion in the gross margin. So what had been the reason basically for this.
Ramprakash V. Bubna — Chairman and Managing Director
See, last year we had a very big volume of one or two particular products, which were not giving us very good margins though comfortable, but the volume was very high. Now this year, that molecule is not playing that important a role and things have become more normal.
Sameer Deshpande — Fairdeal Investments — Analyst
Got it sir, and sir the volumes, the region-wise volumes.
Ramprakash V. Bubna — Chairman and Managing Director
One second. This you are talking about the quarter four, no.
Himanshu Binani — Prabhudas Liladher — Analyst
Yes sir.
Ramprakash V. Bubna — Chairman and Managing Director
The volume in Europe, what is the unit here. Yes, okay. The Europe, the volume is 8,200,000, Latin-America 520,000, NAFTA. 3,20,000 and rest of the world one million.
Himanshu Binani — Prabhudas Liladher — Analyst
Got it, sir. Thank you sir.
Ramprakash V. Bubna — Chairman and Managing Director
Thank you.
Operator
Thank you. The next question is from the line of Resham Jain from DSP Asset Managers. Please go ahead.
Resham Jain — DSP Asset Managers — Analyst
Yes, hi, good evening, sir. Sir my question was on generic manufacturing. We hear that with China opening as some of the Chinese players are also selling. several products at cost as in. And some of the, this is some of the Indian players are saying that because of this they have shut down their plant also in some cases. So in this kind of situation, how does it helps or it impacts Sharda. I presume it, in other words any sense on, will it help our overall volume growth in ’24.
Ramprakash V. Bubna — Chairman and Managing Director
It should. Resham [Foreign Speech] See some of our sourcing is meant when China was getting difficult and Indian manufacturers had appeared on the scene. It was March, very slowly, very slow rate was also shifting towards India. And now it will go back to China if the Indian manufacturers are not able to compete with the Chinese in the price. So that will be to some extent beneficial to Sharda because of Sharda’s business model. As. I am very, repeatedly saying, we are nimble footed. We have all the possibilities and very convenient for us to shift from one source to other source, both approved sources.
Resham Jain — DSP Asset Managers — Analyst
Okay. Thank you sir, sir my. Yes. Sir my second question was related to the off patented products. A few years back you mentioned that there are several large products going off patent and in next few years those opportunities should come. There are several new products getting off patented since last year. Are you seeing any major opportunities there. And how are we positioned in those products, entire at the manufacturer.
Ramprakash V. Bubna — Chairman and Managing Director
Sir, these products will definitely give us a good opportunity. But the off patented products are also very difficult for registration and also for manufacturing. So there are, there will be some quality issues, where we’ll have to pay more attention, and we will have to spend more time and resources to get the registrations. But we are on the right track and right path. And that will help us in the long-run.
Resham Jain — DSP Asset Managers — Analyst
So any color, any color if you can give on the registrations, which you have been doing as two years, in the coming two years, three years. How is the mix between, let’s say, a traditional genetic product versus slightly more complex product where the addition probably at the marketplace is lower the price differential is better or the margins are any. Any comments if you can help it.
Ramprakash V. Bubna — Chairman and Managing Director
Sir it is very natural and obvious that the new products which are going off-patent, the competition is very less. So if we can get that registrations of these products, in a good time or short-time, the benefit will come to us because there is very little competition. Other generic products, these are generic for last 20 years or 15 years, we call them as commodities. There the competition is more and margins are less. We also market those products because we have to fulfill the requirements of our customers as much products that they want and they prefer also buy from one source. So that is why we also market them, but our stress is on the newer products.
Resham Jain — DSP Asset Managers — Analyst
Understood, sir. Okay, thank you and all the best.
Darshita Shah — Antique Stock Broking Limited — Analyst
Thank you Resham.
Operator
Thank you. The next question is from the line of Archit Joshi from B&K Securities, please go-ahead.
Archit Joshi — B&K Securities — Analyst
Hi, good evening, sir and thanks for the opportunity. Sir, my first question is on the capex guidance that you gave, which is around INR400 crores. As I remember right, it used to be in the range of INR150 to INR200 crores sometime back and you have alluded to the fact that registration costs have been going up. But is this purely because of the rising registration cost or do we have more number of molecules in the pipeline compared to what we used to do before.
Ramprakash V. Bubna — Chairman and Managing Director
See my friend this is because of both the factors. But more because of the cost of registration is going up. Not because of the molecules. Every time, every year, the cost of registration is going up because of the requirements of the authorities. They’re are more on more stringent and they want to do a very thorough test and make very sure. And the same molecule, If I had registered six years back, five years back, it would have cost me say. $1 million. Today, the same molecule will cost anybody between $1.2 million to $2 million.
Archit Joshi — B&K Securities — Analyst
I understood sir.
Ramprakash V. Bubna — Chairman and Managing Director
Because the requirements of the authorities are also increasing and expanding.
Archit Joshi — B&K Securities — Analyst
Understood, understood sir, thanks. My second question, sir, apologies for harping on the same issue lot of participant s have asked on your margins previously, but you mentioned that we have grown in terms of pricing for this quarter by about 2% and even more for the entire financial year and we have seen that the generic prices are falling as many participants mentioned before. I’m just curious to understand were in an extremely better position at the end of the third quarter to take benefit of the situation in China, falling raw-material prices, and that we must-have procured at a very low cost. And then on the top of that you were able to pass it on quite well in the European and other geographies. Would that be a fair assumption.
Ramprakash V. Bubna — Chairman and Managing Director
No, sir. When you said very low prices, that assumption is not correct. The drop in the prices in China has also been gradual. And the current prices which are probably at the lowest level, nobody has been able to take advantage of because there is a time factor. You have to source the product, transport them, deliver them, pack them as per the requirements. So, any advantage of the drop in price there is a time lag of at least for two to three months. We would be able to do it a little faster. But most of the people who are doing their own manufacturing, they are also buying penultimate made raw materials from China. And for them to get advantage of all these things you will — the time lag is still more.
Archit Joshi — B&K Securities — Analyst
Understood, sir. I was actually — how in this environment you were able to improve on the pricing also that was my main question and wanted some more understanding from you. And usually a price increase that we were able to take usually happens when our inventory levels are very comfortable from the previous quarter. I’m sure there must-have been some amount of inventory in 3Q that you’re already sitting on and as you rightly mentioned that the price fall gradual, how did we manage the inventory and eventually subsequently passing on these prices or being able to sell at a higher, higher realization. That’s my last question sir, if you can answer. Thank you.
Ramprakash V. Bubna — Chairman and Managing Director
Very obvious, my friend. As I told you, there is a lot of noise about the prices. But most of the customers, they want the goods next day. They don’t wait for three months to take advantage of the prices. These are all seasonal products. Many times if I tell a customer that yes, the goods have all landed in the port and it will be there with you in two weeks, he doesn’t come back to us. People want the product the day they need it you know. So..
Archit Joshi — B&K Securities — Analyst
Got it sir.
Ramprakash V. Bubna — Chairman and Managing Director
Was there the price in China after three months, it doesn’t help them. They have no other choice, but to come to me, because I’m able to deliver to them the next day. Then they have to pay my price and price in China is just an imagination for him.
Archit Joshi — B&K Securities — Analyst
Got it sir, thanks thanks for the explanation.
Ramprakash V. Bubna — Chairman and Managing Director
Does it answer your question.
Archit Joshi — B&K Securities — Analyst
Yes sir. I do. Thank you sir. Thanks all the best.
Operator
Thank you. We will move on to the next question that is from the line of [indecipherable] Avendus Spark Capital, please go-ahead.
Unidentified Speaker —
Thanks for the opportunity, sir. My question is on the revenue guidance outlook that we have given. Led by volume growth. So just want to understand. What would be the primary driver for the strong double-digit outlook on volume growth, is it because the macro is something, this kind of a macro is something that suit us, as in a low RM price environment allows us to take a lot of market share gains, is that the primary driver. That’s my first question.
Ramprakash V. Bubna — Chairman and Managing Director
There is going to be both price and product mix as well as volume.
Unidentified Speaker —
So this 15% revenue growth guidance. So it includes a mix of all three, is that.
Ramprakash V. Bubna — Chairman and Managing Director
Yes.
Unidentified Speaker —
Okay, sir, in terms of geographical outlook, between the geographies, any color that you, you are at this point in time, looking at your outlook for year ’23 geographies. So how you are expecting things to kind of..
Ramprakash V. Bubna — Chairman and Managing Director
Our best geography is European Union. Where there is a discipline and the rule of law is being followed. And there are no shortcuts or parallel products entering and strong products entering into the Delta region. So there we get the best value for the product. NAFTA had been increasing for us for the last two years. but this year there has been a little bit of a blip because of the sudden adversity of the weather. But this will also improve because ultimately the farmers are also doing their best to grow the crops. And they will need also agrochemicals.
Unidentified Speaker —
Okay sir, in terms of registration, portfolio that we have. So do we see in the last one or two years, things have improved in terms of the portfolio that you have in hand that gives us a better confidence in terms of Increasing our market-share in these geographies. Is there any material shift that you see that has happened in the last two, three years.
Ramprakash V. Bubna — Chairman and Managing Director
That it gives us a very good level of confidence and when you look at our portfolio, which we are very proud. And anybody who looks at our portfolio, who knows the products and the registrations, he has a lost of respect for Sharda that we’ve been able to get the registrations in time and choose good molecules for registering.
Unidentified Speaker —
Sir one final question from my side. In terms of distribution reach for this incremental market-share or volume-driven growth. So is this something that we need to argument or we already have in place a good distribution. So that level itself is good enough for us to further pick it up on the volumes.
Ramprakash V. Bubna — Chairman and Managing Director
We have a good set of distributors and we are adding. Distributors remain more or less the same but there’s also, in addition in to that.
Unidentified Speaker —
Thanks.
Operator
Thank you. The next question is from the line of Rohit Nagraj from Centrum Broking. Please go ahead.
Rohit Nagraj — Centrum Broking — Analyst
Yes, thanks for the opportunity and congrats on good set of numbers. Sir, first question is on the off-patent products. So just wanted your perspective historically, whenever there is state of off-patent products, does it actually have a positive impact or in the short-term it could be a negative impact, because the competitive products are coming at a lower-price when the off-patent products are being generisized, and then over a period of time, it is actually favorable for us. So just wanted to get a perspective, a short-term impact of these off patented products and medium-term impact on our business.
Ramprakash V. Bubna — Chairman and Managing Director
Mr Nagraj, I want to just explain you that the registration and off-patent process in agrochemicals very much different than in the pharmaceutical sectors. In the pharma sectors, when the product goes off-patent, all of a sudden there are large number of players, who are sitting with the registrations and they jump into the arena very quickly. Because the process of registration is not so expensive and not so time consuming in pharma sector. In agrochemicals, it is absolutely different. In pharma the innovator loses interest of that molecular product within next two, three years. But in agrochemicals, an innovator continues to be playing a very significant role in an off-patent product commanding 70% to 80% of market-share even 10 years after the product goes off-patent. Because the process of entry of the competitors is very slow and very difficult and not so attractive for any investor. If he wants to invest some capital he prefers to invest capital into many other areas, including plant and machinery fixed assets rather than going for registrations, which is not so interesting for him and it’s built-up with lot of uncertainties.
Rohit Nagraj — Centrum Broking — Analyst
Thanks sir, this is absolutely.
Ramprakash V. Bubna — Chairman and Managing Director
[Speech overlap].
Rohit Nagraj — Centrum Broking — Analyst
Yes sir, this is absolutely helpful and probably the analogy can be applied for other off patented molecules as well. Thanks very much for this. The second question is from the product pricing perspective and again apologies for harping on the same issue. So given that the generic prices have corrected meaningfully over the last one year, what is your sense that now those prices are stabilizing and probably will stay at these levels given that even the raw-material prices have corrected and the associated operating expenses, logistics costs have also corrected. So effectively from here there will not be any downside of all the product pricing and whenever things improve inventory gets consumed the product prices will start again moving up slowly. Your sense on this sir. Thank you.
Ramprakash V. Bubna — Chairman and Managing Director
Sir, as I’m explaining you again, probably I’m going to repeat. That prices don’t correct in the agrochemicals field so abruptly and so fast. And multinationals and innovators continue to share 75% to 80% market at their prevailing prices. And these things get impacted if there are many competitors jumping into the field, all of a sudden. In agrochemicals, you will find even today, after seven to eight years or 10 years, maybe we are the third or fourth registered of a molecule getting a very good margin on those molecules and no competition. And our strategy is not to kill the product and the market. Our strategy is to support the innovators, we don’t drop the prices more than 10% of the innovators place. So innovator is also not very much angry with us that we are going to kill this molecule.
Rohit Nagraj — Centrum Broking — Analyst
Right, right, sir. Got it. I was more talking from the generics like say glyphosate glufosinate where the prices have dropped and those prices are getting stabilized now. From that perspective, sir.
Ramprakash V. Bubna — Chairman and Managing Director
Sir, generics, these kind of generics don’t interest us. We call them as commodities. When there are 20 people sitting with the registration, then it is no longer. sort of interest. I’m not talking about these products, when I talk of agrochemicals in context of Sharda.
Rohit Nagraj — Centrum Broking — Analyst
Right, right. Right sir. Got it, this is very helpful and best of luck sir. Thank you so much for answering all the questions, sir.
Ramprakash V. Bubna — Chairman and Managing Director
Thank you sir.
Operator
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for the closing comments.
Ramprakash V. Bubna — Chairman and Managing Director
I would thank everybody and all of my investor friends who have spared their valuable time to join this conference call. I hope we have been able to answer all your queries. And we learn a lot from the queries that you put to us, it help us to ride and pilot business. We look forward to such interactions in the future. We hope to meet your expectations in the future too. In case you require any further details, you may contact us or our strategy growth advisors without any hesitation. Thank you so much. Thank you members of the management team. Ladies and gentlemen, on behalf of Antique Stock Broking. [Operator Closing Remarks].