Tarsons Products Limited (TARSONS) Q4 FY23 Earnings Concall Transcript

Tarsons Products Limited (NSE:TARSONS) Q4 FY23 Earnings Concall dated May. 29, 2023.

Corporate Participants:

Rohan Sehgal — Whole Time Director

Santosh Agarwal — Chief Financial Officer

Analysts:

Sundar — Avendus Spark — Analyst

Jaiveer Shekhawat — Ambit Capital — Analyst

Harsh Mulchandani — Kriis Portfolio — Analyst

Ankur Kumar — Alpha Capital — Analyst

Jasdeep Walia — Clockvine — Analyst

Karan Gupta — Varanium Capital — Analyst

Omkar Kamtekar — Bonanza Portfolio — Analyst

Amit Kumar — Determined Investment — Analyst

Harsh Shah — Marcellus Investment Managers — Analyst

Unidentified Participant — — Analyst

Sandeep Abange — LKP Securities Limited — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Tarsons Products Limited Q4 FY ’23 Earnings Conference Call. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectation of the company as on date of this call. These statements do not guarantee the future performance of the company, and it may involve risks and uncertainties that are difficult to predict. [Operator Instructions]. Please note that this conference is being recorded.

I now hand the conference over to Mr. Sundar from Avendus Spark. Please go ahead.

Sundar — Avendus Spark — Analyst

Thank you, Ian. Good afternoon, everyone. On behalf of Avendus Spark, I welcome you all to the 4Q FY ’23 earnings conference call of Tarsons Products Limited. We are pleased to have with us management team represented by Mr. Rohan Sehgal, Whole-Time Director and the Santosh Agarwal, CFO of Tarsons Products Limited. Without much ado, I’ll pass on the call to Mr. Rohan. We will have brief opening remarks from the management followed by a Q&A session. Thank you and over to you, Rohan.

Rohan Sehgal — Whole Time Director

Good afternoon, and a very warm welcome to everyone present on the Q4 FY ’23 earnings conference call for Tarsons Products Limited. Along with me today, I’m joined by Mr. Santosh Agarwal, Chief Financial Officer and Company Secretary for Tarsons Products Limited and SGA, Investor Relation Advisors. We have uploaded our quarterly investor presentation on the stock exchanges and Company’s website. I hope you all had an opportunity to go through the same.

The global life science industry has undergone significant transformation over the past two years, as it adapted to the challenges posed by the pandemic. While we encountered some challenges in the industry during the last 12 months post the pandemic period, we are now witnessing indications of recovery which has also been demonstrated by our performance in this quarter.

Our revenues have increased by 34% sequentially. We had seen some temporary degrowth as the entire life science industry had degrown, but we have outgrown the industry growth, which in-turn helped us gain market share in plastic industries and product categories. We have shown resilience by maintaining a lean, efficient and sustainable operations across period of slowdown. Throughout this period, we have skillfully handled the ever-changing landscape, capitalizing on new opportunities that have emerged in front of us and stood tall across all headwinds faced by external factors.

As the world gradually returns to normalcy, we have also witnessed a steady recovery in our performance allowing the company to resume its growth trajectory. [Technical Issues] we are actively pursuing strategies aimed at unlocking future growth. Recognizing the increased opportunities and demand for plastic labware products, we have strategically positioned ourselves to capitalize on these strengths by leveraging our expertise and experience we gained to meet the growing needs of all life science industry and expand our market presence.

Speaking on the quarterly and yearly performance, our revenues in Q4 FY ’23 stood at INR82 crores, this was lower 3% Y-o-Y compared to Q3 FY ’23. Compared to the Q3 FY ’23, it has grown by 32%. Our revenues for FY ’23 stood at INR283 crores as compared to INR301 crores in FY ’22. This was lower by 6%, but if you compare similar numbers with the industry, we have outgrown the industry by healthy numbers. The decrease in revenue on Y-o-Y basis, as mentioned was attributable to two reasons. Firstly, the slowdown in the industry, which we have seen in the recent months have led to reduced demand for plastic labware products. Secondly, as stated in our previous communications, there was significant increase in the demand for COVID related products in FY ’22. However, the demand for these products is negligible in this financial year.

Despite the sharp decline in revenue from COVID related products, our conventional business performance compensated for the loss of this business. If we look at our conventional business only, we have shown resilient growth for FY ’23 and are poised to achieve strong and sustainable growth in the foreseeable future.

Let me speak about the export opportunities of the company. We strongly believe that exports present a vast market opportunity for us. We are just scratching the surface and have a long way to go in the international market. This can be done by increasing the brand awareness of Tarsons in global markets with active participation in numerous international fairs and exhibitions where we showcase our growing portfolio with our continuous outreach by our direct and distribution channels in the international market. We are confident of securing good business in the overseas market, in the near future. We will maintain our commitment to investing in sales promotion, marketing and travel expenses for our active participation in fairs, seminars, and exhibitions, which we believe will pave a strong path for a strong future growth in the international business.

During the quarter compared to Q3 FY ’23 three, our export revenue had showcased a growth of 19%. Our plan is to capture higher market share in the export markets both in the OEM as well as the branded sales. Exports will be very important market for our future growth path.

On the EBITDA front, in our current quarter our EBITDA stood at INR39.3 crores, with an EBITDA margin of close to 48% as compared to EBITDA margins of 33.5% in Q3 FY ’23. This shows the high-level of operating leverage play in our company. We have witnessed margin improvement in comparison to the previous quarter, primarily due to operating leverage resulting from increased revenues in this quarter.

On the capex front, our commercial production at our manufacturing facility at Panchla should commence from Q2 FY ’24 onwards in a staggered manner. Few of the product lines will be operational by Q2 FY ’24 and full commencement is expected by Q4 FY ’24. The ramp-up of these facilities will take place in FY ’25, enthusiasm for the future growth opportunities brought forth by this expansion remains unwavering. This expansion will grant us access to previously unexplored markets and product categories, and we are fully prepared to establish a dominant presence in these markets as well.

Before handing over the call to Santhosh, I would like to conclude that going ahead, our focus is on maximizing sustainable growth potential by making strategic investments in new product development, expanding our production capacity and diversifying across geographies. These initiatives are aimed at meeting the evolving demands of life science industry and ensuring our continued leadership position in our core markets.

With this, I would like to hand over the call to Mr. Santosh Agarwal, CFO of Tarsons for his comments on the financial highlights.

Santosh Agarwal — Chief Financial Officer

Good afternoon, everyone, and a very warm welcome to our Q4 FY’23 earning call. On the revenue front, if you talk about, revenue from operations for Q4 FY ’23 stood at INR82.1 crores as compared to INR84.9 crores in Q4 FY’23, lower by 3% on Y-O-Y basis. When compared to Q3 FY ’23, on revenue grew by 34%. For FY ’23 revenue from operations of FY ’23 stood at INR283.2 crores as compared to INR300.8 crores in FY ’22, a degrowth of 6% [Phonetic].

For Q4 FY ’23 revenue from export stood at INR25 crores and domestic at the INR57.5 crores. For FY ’23, exports stood at INR22.4 crores and domestic was INR191 crores.

For Q4 FY’23, exports sales contributed around 30% and domestic sales contributed around 70%. And for FY ’23, exports sales contributed around 33% and domestic sales contributed around 67%. At a gross profit level, our gross profit for Q4 FY ’23 stood at INR62 as compared to INR66 crores in Q4 FY’23. For FY ’23 specifically [Indecipherable] stood at INR218 crores as compared to INR238 crores in FY ’22. Our GP margin for Q4 FY’23 stood at 75.2% and for FY’23, GP margins stood at 77%.

At EBITDA level, EBITDA for Q4 FY’23 stood at INR39.3 crores as against INR44.3 crores in Q4 FY ’22. EBITDA for FY ’23 stood at INR130 crores as compared to INR153 crores in FY ’22. EBITDA margin before FY ’23 stood at 47.8% and for FY ’23 EBITDA margin stood at 45.8%. EBITDA margin went up by 400 basis-points on a sequential basis. Regarding PAT, PAT for Q4 FY ’23 was INR23 crores with PAT margin of 27.8% and PAT for FY ’23 was at INR81 crores with PAT margin of 28.5%.

We would like to highlight that PAT [Indecipherable] from operating activities stood at INR100 crores which is a healthy conversion of [Indecipherable]. Our PAT may be impacted in the next one or two years due to high depreciation charge on P&L on account of [Indecipherable]. But we are confident of steady cash flow from operating activities going forward.

With this, I would like to open the floor for Q&A.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Jaiveer Shekhawat with Ambit Capital. Please go ahead.

Jaiveer Shekhawat — Ambit Capital — Analyst

Sure, Hi everyone. Firstly, my question is on the magnitude testing of cough syrup of exports that we are seeing, which will begin from 1st of June. So have you seen any export in labware demand from government labs because of this, and are you also seeing your end-customers stock up inventory in anticipation of another possible COVID wave given the recent news in China.

Rohan Sehgal — Whole Time Director

Could you repeat the question, you were not very audible Jaiveer.

Jaiveer Shekhawat — Ambit Capital — Analyst

Sure, can you hear me now?

Rohan Sehgal — Whole Time Director

Yeah.

Jaiveer Shekhawat — Ambit Capital — Analyst

Yeah, so one is, given that there has been mandatory testing of cough syrup exports, which will start from first of June, are you seeing any spurt in labware demand from the government labs specifically and also across your end-customers, is there a stocking up of inventory happening given in anticipation of another possible COVID wave.

Rohan Sehgal — Whole Time Director

So, for this, so this at this point of time, we don’t hear or see anything. There has been no discussion about this in the labware market, so things are as stable as what it was two or three months ago. So, nothing for now.

Jaiveer Shekhawat — Ambit Capital — Analyst

Sure, and secondly, on your inventory days, if you could just reiterate what has led to the significant increase in inventory days, and what was the breakup across raw-material [Technical Issues] finished goods inventory year.

Santosh Agarwal — Chief Financial Officer

Sure, Jaiveer, regarding the inventory, I would like to give us the detailed clarification on that. For example, if we are talking about inventory that on the raw material, the raw material has been increased from INR30 crores INR42crores on a year-to-year basis. The major reason for increase in raw material stock is [Speech Overlap]. They imported medical-grade resin has a long-lead time. Second, duty [Indecipherable] is more viable with full container. Thirdly, the sensitive raw-material stock has been increased because of new product launches like [Indecipherable]. And the next one is to understand that we need to keep at least four months of stock as per our current scale. The raw material stock will be further optimized as we will reach to the higher scale. So, this is related to raw-material. And then when we talk about [Indecipherable] work in progress, our bridge group [Phonetic] used to be about INR41 crores last year and this year, we have touched about INR55 crores. The major reason for increase in bridge group is the fact that company need to keep at least three months of bridge group [Phonetic] considering [Indecipherable] and current scale of occupancy. The company continuously launching new products and [Indecipherable] needs to be produced to get the sample and vitality. This is a sluggish process which also leads to generate inventory.

Thirdly, company needs to revise its constrained capacity for the higher demand so that’s on anticipation of bigger regular supply, which want to receive can create supply on-time at that point of time. Some international customers need the goods as per their requirement even though the goods are ready. Then, it is extra inventory also produced in anticipation of periodic repair of most material and medicine plant. Apart from that, sometimes conversion time of semi-finished goods into finished goods also increase because of various reason.

Last but not the least, extra inventory also generates because of difference between the new order quantity that and the sales of the page. The stock can be well optimized as we progress towards the [Indecipherable]

Rohan Sehgal — Whole Time Director

So basically, what’s happening in JV, is that unlike most companies in Asia and in India, we are around 77% to 78% of our revenue comes from branded business and not from OEM or ODM business, so we’re not producing against orders, but we are producing for stock and then building our business through marketing channels. And as we build major projects like how we are building the PET and PBG bottle project now, which will be followed by Cell Culture and various other projects in our new facility, there would be a lot of inventory, both in terms of raw-material as well as finished products, as we scale-up those projects and start to see more-and-more demand from the markets.

Jaiveer Shekhawat — Ambit Capital — Analyst

Yeah, that’s very helpful. Now lastly on your Panchla facility — one, what kind of revenue addition do you expect for Phase 1 and full commissioning of the facility. And could you also update on the overall capex you have incurred across Panchla and Amta till-date, and how much is remaining out of the INR500 crore capex guidance that we’ve given.

Rohan Sehgal — Whole Time Director

See, currently we are doing about INR500 crores to INR550 crores of capex. And if you talk about Panchla, if the Panchla will be completed fully and we utilize the Panchla capacity fully that will not happen immediately, that will happen over the course of time. We believe that the revenue from Panchla will be at least INR500 crores from Panchla itself, but that will take some time.

Jaiveer Shekhawat — Ambit Capital — Analyst

Yeah, and do you expect any revenue additions during this year itself and from the new facility, what would be the quantum of that?

Rohan Sehgal — Whole Time Director

So, we expect that by August — in the month of August, our first installations come in and we gradually ramp-up till the end of the year. So, at this point of time, it’s very difficult to do give a number as to what would come, but we will have commercial production and Products moving out right from the beginning of the end of Q2, all the way up to Q3 and Q4, but I think over the next eight to nine months, we should have everything installed, what was planned in this phase of expansion. As you know that we would not be utilizing the complete floor space in this facility in Panchla and about 40% to 45% of infrastructure will be ready for product developments or product capex.

Jaiveer Shekhawat — Ambit Capital — Analyst

Sure, that’s helpful. Thanks a lot.

Operator

[Operator Instructions] Our next question comes from Harsh Mulchandani from Kriis Portfolio. Please go ahead.

Harsh Mulchandani — Kriis Portfolio — Analyst

Hi, Rohan. Just a couple of questions. One is we are seeing the industries going under slowdown, last-time also we had discussed. So are we seeing some improvements going forward, like because the numbers this time look much better than what they were previously, so do we see some positive traction happening on ground?

Rohan Sehgal — Whole Time Director

So, as I informed in some of our previous earnings calls as well, I think during COVID when there was more demand and less supply, it was very easy for most of the brands in the market, we make revenue or make business, but at this point of time when the supply is more and the demand is less, we’ve been able to demonstrate some very strong performance because of very strong positioning in the key markets, as well as our very strong brand recognition and brand recall. So, I believe that even today, the market is recovering. I would not say that the position is as bad as what it was six months back, but it’s not in the best places. Well, the market is recovering, but we are — but we would be leveraging our strength in certain key markets including India, India being the number-one market, and being able to generate better revenues than expected considering the market situation.

Harsh Mulchandani — Kriis Portfolio — Analyst

Got it, sir. And we had the earlier guidance of INR500 crores top-line. So still considering that we are nearing our target date, do you think it’s still achievable or considering the current slowdown, etc., you would need more time to get there?

Rohan Sehgal — Whole Time Director

So, we have two full financial years now with FY ’24 and FY ’25. I think towards the end of this financial year, where we land up, how the market moves, how the industry moves, we would have a more clearer picture, but at this point of time, I would not like to speak about this guidance, I’d like to see how the industry moves over the next nine to 12 months, and then we could probably take.

Harsh Mulchandani — Kriis Portfolio — Analyst

So that’s all. Perfect, thank you so much. Best of luck.

Operator

Thank you. [Operator Instructions] Our next question comes from Ankur Kumar with Alpha Capital. Please go ahead.

Ankur Kumar — Alpha Capital — Analyst

Hello, sir. Thank you for taking my question and congrats for the improvement in numbers. Sir, my first question would be as in we have done capex and we also talked about higher depreciation charge. So can you quantify, please, how much will it be higher?

Santosh Agarwal — Chief Financial Officer

The depreciation will come as per the [Indecipherable]. So, we are running, as you already know, we are running with INR550 crores of capex, and as soon as the [Indecipherable] visiting comes to our factory, then we will do the evaluation, and then it will come into production. So as soon as the production will start, we will start depreciating goods, machineries and molds. In case of machineries and molds, the depreciation rate is 18% and in case of building, the depreciation [Indecipherable] So it is very difficult to give any numbers right now. It will happen once the production will happen.

Ankur Kumar — Alpha Capital — Analyst

Got it. And, sir, on margin side, we have seen improvement in this quarter, but overall for FY’23, our margins are lower than last year. So, any guidance that we will see continue to see improvement. Can we go back to over 50 plus percent again or it will take time?

Rohan Sehgal — Whole Time Director

So, it’s basically as a company, just like most growing companies in India, our costs increase year-over-year because we are a set of 700 people and there are increments in company year. So if you see that last year we had done INR300 crores, this financial year it was INR283 crores, but cost have sequentially increased in the company, right. So, the reason you see improvement in margins is because revenue showed up in Q4 FY ’23 and with higher revenues, we were able to — with higher scale, we were able to compensate for those costs. So, moving forward, as we expect, you know, the scale of the company to grow more and more, cost would be consumed at this growing scale, and margin should start looking better.

Santosh Agarwal — Chief Financial Officer

I think this kind of recessionary environment, then we are getting into [Indecipherable] scale up opportunity. If we were to added [Technical Issues] we don’t hesitate for that.

Ankur Kumar — Alpha Capital — Analyst

Got it sir. And just also on the growth side, what kind of growth can we expect for this year.

Rohan Sehgal — Whole Time Director

So, I would not again put a number on the growth part. We are preparing ourselves both in terms of market demand, by boosting our marketing and sales teams in terms of capacity. We are boosting up our capacity in big levels in our new facility, so that we are ready for large OEM customers internationally. And in terms of building our revenue, we are always on the hunt of strong inorganic acquisition opportunities to help build our international sales in Europe, in the U.S. and other key geography. So as a thumb rule, we are preparing ourselves from all angles to be ready for the next phase of growth, and will see how things move along.

Ankur Kumar — Alpha Capital — Analyst

Got it. Thank you, sir, and all the best.

Operator

Thank you. [Operator Instructions] Our next question comes from Jasdeep Walia with Clockvine. Please go ahead.

Jasdeep Walia — Clockvine — Analyst

Hello, good afternoon can you hear me?

Rohan Sehgal — Whole Time Director

Yes, we can hear. Good afternoon.

Jasdeep Walia — Clockvine — Analyst

Sir, from our industry interactions we have that significant amount of capacity has come up globally. Mostly all the players in this market globally have increased their capacity by two times. So do you see pressure on export margins going forward?

Rohan Sehgal — Whole Time Director

So, just like how we had increased our capacities, many of the large global players have also increased capacities, but I cannot confirm the number of the this, because I do not have data or information on that, but key players have increased capacities throughout the COVID pandemic and competing the capacities as we are competing today. But I feel that it should not affect our margins drastically because we always played in a very body value concentrated market internationally, where we provided great value to customers, very high quality at significantly lower prices compared to large global MMCs. So, we have currently not seen any changes over the last 10 to 12 months in our export margins, and going forward I think with improving product mix having a larger basket to offer to your customers and having better capacities to be able to take on large-scale global OEM projects actually we are in a very good position.

Jasdeep Walia — Clockvine — Analyst

Got it. So, I’m guessing all these capacities which came up globally, significant capacity creation would have been related to COVID related products, right? So actually, I just want to ask you whether these capacities are fungible, so let’s say somebody built capacity for COVID related products but can it be repurposed to produce something else now that the COVID demand is not there.

Rohan Sehgal — Whole Time Director

So, a facility generally consists of the building and then the cleanroom infrastructure and then the molds, machines and automation. So, the molds and the automation cannot be fungible, it’s very, very — its used exactly for its purpose, but the building, the cleanroom infrastructure and the machines probably can be fungible.

Santosh Agarwal — Chief Financial Officer

And we just wanted to add one more thing that none of our capex are related to COVID kind of thing, right. We had done all these capex consisting our [Indecipherable]. So, maybe it can be the pace that the world market or other peers have invested lot of money on COVID related, so that is pure COVID, that in case of Tarsons, all our capex has been injected. So. COVID and non-COVID both products. That if COVID demand is not there, the product can be catered to non-COVID area.

Jasdeep Walia — Clockvine — Analyst

Got it sir, got it. So, on cell culture products, do you already have a few contracts, maybe on the export side, which could help you scale utilization to some minimum level when you start.

Rohan Sehgal — Whole Time Director

So basically in our industry, it’s very complicated and difficult, I would say, literally impossible to receive contracts unless the customer has the product in their hands, because once the customer has the product in the hand by customer, I mean the importer or the large-scale OEM distributor, then we would distribute those products samples which is large scale sampling to various new customers and on their approval, will he sign up a contract or when you decide to import basis that the pricing and the quality are matching as per the expectation. So at this point it’s very premature stage for any large-scale importer OEM distributor to award us any contract without having any product in their hand.

Jasdeep Walia — Clockvine — Analyst

Got it sir. So, the scale up of the cell culture facility in the initial days would be more driven by exports or to scale up in domestic market. So, we build capacity, we build projects keeping our current state of affairs in India as well as internationally. So, we do not plan that we will sell this much in India and this much in overseas markets, but it’s more of the branded distributors internationally, the branded customers in India, which is 100% of our business and then trying to approach each large OEM opportunity as it comes. Got it sir. Thank you. That’s all from my side.

Operator

Thank you. [Operator Instructions] Our next question comes from Karan Gupta with Varanium Capital, please go ahead.

Karan Gupta — Varanium Capital — Analyst

Yeah, hi. Thanks for the opportunity. Sir, specific question starting with the year-on-year and the margins. So, if you see the whole year-over-year [Indecipherable] slowdown and the profit margin, the margin is also coming down. I was late to join the call, so if you just give me the reason for that.

Rohan Sehgal — Whole Time Director

So, basically, we have a lot of fixed costs in the company. The major fixed costs being the compensation for all our employees which grows sequentially on a year-on-year basis. So, if you see that costs have increased in terms of opex cost, the numbers have gone down and that is one of the major reasons why our margins are down.

Santosh Agarwal — Chief Financial Officer

I just wanted to give some data points. For example, in FY ’20, our EBITDA margin was 39.4%, and in FY ’21, our EBITDA margin was 45.2%. In FY ’22 because of the higher COVID related product mix, we got 15.8% of EBITDA margin, but in FY ’23 we reported 45.8% EBITDA margin, which is much higher than FY ’20 and FY ’21 number. So, we don’t find any reason that our numbers are on a major side, we still looks good, and we are hopeful that we are able to maintain this kind of margin in the future.

Rohan Sehgal — Whole Time Director

So, also just add to Santhosh, we have never have done that in the past. We see no reason to do that. We see no reason to do that considering you know, our future business prospects as well. We will always increase costs year-over-year in terms of people adding more people, increase of salaries, we don’t do any layoffs. So, if revenue remained stable, cost will increase, so margins will, you know, decrease. We have to grow revenue year-over-year to be able to sustain margins.

Santosh Agarwal — Chief Financial Officer

There are some [Indecipherable] are there, which you see in the P&L account, it looked like the bigger cost, but for us, is it more like [Indecipherable]

Karan Gupta — Varanium Capital — Analyst

Okay, fair enough. [Technical Issues] more margin-accretive segment in consumer [Technical Issues]

Santosh Agarwal — Chief Financial Officer

[Indecipherable] consumers have more or less equal kind of mind.

Karan Gupta — Varanium Capital — Analyst

Okay. [Technical Issues] more capex and taking really [Technical Issues].

Rohan Sehgal — Whole Time Director

The line is not clear. I think you have to mute yourself before speaking. There is background noise, so can’t hear you very well.

Karan Gupta — Varanium Capital — Analyst

[Technical Issues]

Rohan Sehgal — Whole Time Director

We are not focusing on this segment. We build products and projects based on market demand, and we’re not very concerned with those ratios of what the reusable or consumables segment offers to our total revenue.

Karan Gupta — Varanium Capital — Analyst

Okay. On the questions on the demand section [Technical Issues].

Operator

Karan, I’m sorry to interrupt you there, if you could please join back the queue of follow up questions. Our next question comes from Omkar Kamtekar with Bonanza Portfolio. Please go ahead.

Omkar Kamtekar — Bonanza Portfolio — Analyst

Hello, thanks for taking my question. So, first question, what I would want to ask is it is a clarification actually. The Panchla plant that is going to be coming online, so you had said earlier in the call that this plant will contribute additionally INR500 crore at full capacity or it will help us reach to INR500 crore our top-line target. Just a clarification on that first.

Rohan Sehgal — Whole Time Director

So basically the Panchla facility has the capability to produce INR500 crores on its own, but as I’ve said in calls that we’re just utilizing about half or little more than half the facility. There is half more infrastructure available for further machines and molds, for which the current capex of INR500 crores to INR550 crores is not accounted for. So, in earlier calls also, we have mentioned that we are building a larger infrastructure but utilizing only a portion of that infrastructure currently. So, if Panchla is built completely, it has the capability of utilizing, generating that kind of revenue.

Omkar Kamtekar — Bonanza Portfolio — Analyst

And the facility also provides us any backward integration benefits or anything of that sort?

Rohan Sehgal — Whole Time Director

No benefits of in terms of backward integration.

Omkar Kamtekar — Bonanza Portfolio — Analyst

Okay. So next one what I want to ask is with respect to the export opportunity size, can you give us some color on that, what would be the approximate size of this export opportunity and the areas where this would be focused.

Rohan Sehgal — Whole Time Director

So as per the data availability, the global research data what we had, it’s about an $8 billion market, which translates to somewhere around INR60,000 odd crores, major markets are the western countries of Europe, six to seven countries, the United States of America, Canada and China and Japan, However, there are multiple number of players available in these markets, multiple strong legacy brands available in these markets. So, our focus and our strategy would be to develop strong OEM relationships in developed countries, that brand plays a very strong role and to build a good branded position in developing countries where you know there is availability of — there is a possibility of new brands entering because today in branded markets of USA and Germany, France, U.K. it is very difficult for unknown Asian brands to go and make a branded presence.

Omkar Kamtekar — Bonanza Portfolio — Analyst

Okay, so any specific area that we’re targeting in the export market or we will blanket approach all areas in uniform.

Rohan Sehgal — Whole Time Director

We have always traditionally been stronger in Europe and the US and some key geographies in Asia. We continue to leverage our strength in these economies as we get higher bigger product portfolio. And as said earlier, we will always look for inorganic acquisition opportunities to further strengthen our position in these markets, and we will start trying to increase our presence in Middle-East, Africa, Latin-America, where we are not as strong as compared to these other geographies.

Omkar Kamtekar — Bonanza Portfolio — Analyst

Okay, okay and finally with respect to the network and network expansion within the country, what has been the number of — what is the total network dealers and etc., [Technical Issues]

Rohan Sehgal — Whole Time Director

Our focus is always to increase the number of people so that all the areas are well catered to rather than increase the number of channel partners or distributors, because we don’t try to create confusion in the market by having more people and people not knowing who to buy from. So, we have a very well-established channel network, and unless something untoward or unforeseen happens, we generally do not like to tamper with that channel network. We try and build a team for that most areas, most new product-line, most customer bases are covered. That’s the whole endeavor.

Omkar Kamtekar — Bonanza Portfolio — Analyst

Okay, that’s it. Thank you.

Operator

Thank you. [Operator Instructions] Our next question comes from Amit Kumar with Determined Investment. Please go ahead.

Amit Kumar — Determined Investment — Analyst

Yeah, thank you so much for the opportunity, sir. Just one question. You have a good presence in the Middle-East region as well. As an export market, how is that doing for you and what are the opportunities there. And just sort of provide an update last year.

Rohan Sehgal — Whole Time Director

We have a growing presence in the Middle-East. I wouldn’t say that we have a very strong or dominant position in the middle east. The Middle-East market is very different compared to the other markets globally, it is more tender-driven, more inquiry focused, rather than stocking focused, where distributors buy stocks into more products, so we take each geography and each market along with how that market functions, so I feel that the Middle-East market was always very brand-conscious 10 years, 15 years ago, and always relied on high-quality, European and American brands and not trust lot of Asian brands, but that trend is fast-changing, and we are looking to grow in these markets, specifically the UAE, Saudi Arabia, Jordan, Turkey and so on, and it’s been a fairly good growth market for us, but we still to reach our full potential.

Amit Kumar — Determined Investment — Analyst

And sir, just one small follow-up, what would have been the Middle-East contribution to your revenue for fiscal ’23.

Rohan Sehgal — Whole Time Director

I don’t have the numbers in the back of my head, but very negligible. I don’t think, less than 2%, 3%, 3% maybe, but I don’t have numbers the back. I cannot if you an identical number.

Amit Kumar — Determined Investment — Analyst

Okay, 3% is it.

Rohan Sehgal — Whole Time Director

It would be 3% or lower as per my belief. I don’t have numbers though.

Amit Kumar — Determined Investment — Analyst

Sure, thank you. That’s it from my side.

Operator

Thank you. Our next question comes from Ankur Kumar with Alpha Capital. Please go ahead.

Ankur Kumar — Alpha Capital — Analyst

Hello sir. Couple of questions on pricing side, how often do we take a price increase and what is the procedure on that front.

Rohan Sehgal — Whole Time Director

Generally, we take price increases annually in the domestic market and the procedure for that is that we sit down with our cost department and see where do you stand in terms of cost versus the previous year, and when we sit with our marketing and sales, we need to understand what sort of a price can the market absorb based on market conditions. That’s the procedure we follow. In the domestic market we follow similar procedures in the international market, but it is very difficult to get any price increases internationally where the markets are more competitive, and everybody is aware that the currency has depreciated, the Indian rupee against the U.S. dollars, so it’s very difficult to be able to get price increase by international.

Ankur Kumar — Alpha Capital — Analyst

So, on the domestic side, have we taken any price increase this calendar year.

Rohan Sehgal — Whole Time Director

We have taken a very moderate and very small price increase, different price increases across-the-board, because we have 1,700 SKUs, but as explained, price increase has been 100% implemented on day one of announcing the price increase because there are lots of contracts which may not be expiring exactly on the date of price increase. So, we would have to honor those contracts and especially government and semi government contracts very difficult to induce the price increases, unless it reaches the expiry.

Ankur Kumar — Alpha Capital — Analyst

Got it sir, and sir on our total revenues, and how much will be like replacement demand and how much is like new demand.

Rohan Sehgal — Whole Time Director

Basically, in India, new demand would always generally be for our newer products and most of the standard products would be replacement demand. There are far and few there could be new avenues, new areas, new laboratory opening up pharma companies or biotech companies adding new projects, new contracts, CRO having new contracts, that could be of a very small portion of the revenue, but generally for existing products, it’s all mostly replacement demand and newer demand as we try and gain more market-share from our competitors, as you get into newer product lines.

Ankur Kumar — Alpha Capital — Analyst

So like, let’s say INR283 crores revenue of this quarter would like 70%, 80% would be like replacement demand.

Rohan Sehgal — Whole Time Director

I believe so, maybe even more.

Ankur Kumar — Alpha Capital — Analyst

Sure, thank you sir and all the best.

Operator

Thank you. Our next question comes from Harsh Shah with Marcellus Investment Managers. Please go ahead.

Harsh Shah — Marcellus Investment Managers — Analyst

Yeah, hi everyone, hi, there. My first question would be, if you could help us with the outlook for each of the segments that we cater to. That is diagnostic, research and pharma, academia, biotech.

Rohan Sehgal — Whole Time Director

So, I think in terms of outlook, diagnostics still looks like an area where there is significant amount of pressure in terms of sourcing, because there is pressure internally in the diagnostics industry and they look for cost-cutting or lower-priced products, or there is significant demand erosion in the diagnostic space. In terms of academia and research, I think funds are not exactly where it was supposed to be. There is reduction in government available funds for research and development, and I think the pharma segment looks more or less stable, and the biotech CRO space looks poised for very, very — it is going at good numbers and should continue to grow at good numbers. In the diagnostic space, demand from diagnostic equipment manufacturer, diagnostic kit manufacturers continue to be good. When I say that there are issues in the diagnostic sector, it is more on the diagnostic testing companies.

Harsh Shah — Marcellus Investment Managers — Analyst

Okay, so the sequential growth that we show on a Q-o-Q basis, where did that come from? Of course, diagnostic and academia, both of them are not firing off and pharma sort of stable.

Rohan Sehgal — Whole Time Director

Mainly from pharma, from biotech, from CROs. Pharma is stable, it’s not shown the kind of growth what other industries, which are doing well as shown, but there was a lot of lack of revenues from pharma as there were lot of shutdowns and so on, during the COVID pandemic period. So that’s recovering. But still better numbers to be expected from pharma, and we are happy to see the kind of outlook we see some biotech and from CRO and from biopharma companies, but not from the traditional pharma.

Santosh Agarwal — Chief Financial Officer

And just to add, our dependency on diagnostic is not more than 15%. So although diagnostics is in some kind of pricing pressure, but it is not giving us much pain. But of course, we are losing some revenue, but we also getting a good revenue in research segment and in the pharma segment.

Rohan Sehgal — Whole Time Director

But we are optimistic of giving our diagnostic business or reaching better numbers than what we see today. So, from our side, we don’t see any alarm. We see that the way the industry is moving, we are moving in a very, very strong position domestically, and we continue to build on this trend as the industry progresses in India.

Harsh Shah — Marcellus Investment Managers — Analyst

Okay, okay and second question was on new products. So, if you could just quantify the revenue from new products actually from PCR PET G and serological pipettes, and how much was it last quarter.

Rohan Sehgal — Whole Time Director

So I don’t have the data available on-hand of the new products at this point of time. Serological pipettes have shown a significant increase, because of very low-base of traded numbers. I think we have grown by more than 200% this year, but the numbers are very low, but we expect to continue growing at very, very strong digits, maybe 40%, 50%, 60% over the next two-three years, still reaching to a sizable base and then the growth numbers slowdown. PCR Products, of course, has been a big slowdown because of a lot of COVID related testing completely vanishing over this last 10 to 12 months, and PET, PETG bottle, we’ve seen some revenues trickling in, very low revenues in Q4 FY ’23 and moving forward I think all these first two quarters also, you would see a lot of trials and large batches being sent to few customers, but we see a huge revenue pickup for PET and PETG bottles in this financial year.

Santosh Agarwal — Chief Financial Officer

So harsh, whenever we launch a new product, the process is always like this, always it goes through different kind of validation, approval and initial orders will be very low. And then they satisfy, then they start giving the bulk orders, specifically for the product now because serological pipettes, as you see is a quick revenue product but it is used in the lab, very similar to our current products like pipettes and [Indecipherable], but at the moment, you look at PET and PETG bottle, cell culture used in-production in biopharma production or growing of sales or all for vaccine production, this requires some amount of testing and some amount of validation.

Amit Kumar — Determined Investment — Analyst

Okay. Okay, got it. Last question. We have around INR60 crores of cash on the books. However, we have also taken of debt of around INR110 crores. What is the reason for this, because we could have taken a lower amount of debt and maybe utilize that for that as well.

Santosh Agarwal — Chief Financial Officer

Harsh, whatever cash amount you are seeing in our balance sheet, that is more related to Panchla [Indecipherable] which we can only use for the civil construction, whenever the payment will be due. Apart from that, all machine and molds we taken that on loans, so that loan is reflected in the [Indecipherable]

Harsh Shah — Marcellus Investment Managers — Analyst

Okay, so, if you have cash of Panchla, I can also see INR80 crores of long-term debt. I’m assuming that might also be for Panchla.

Santosh Agarwal — Chief Financial Officer

Yeah, that is related to Panchla, but that is not related to building and construction, that is related to machine and molds.

Harsh Shah — Marcellus Investment Managers — Analyst

Okay, the use is different basically.

Rohan Sehgal — Whole Time Director

So, basically when we had reduced the primary capital during the IPO, we had basically given the reasoning for what we needed, and we need those funds for those reasons as well, because otherwise it is very complicated to mix around the funding.

Santosh Agarwal — Chief Financial Officer

So, we can keep INR62 crores from the [Indecipherable] that is the only reserved for civil construction at Panchla. So that is much more than other case we are investing. That is, we are taking term loans from the bank.

Harsh Shah — Marcellus Investment Managers — Analyst

Okay. Got yes. Thank you.

Operator

Thank you. Our next question comes from [Indecipherable] from Fin Narada. Please go ahead.

Unidentified Participant — — Analyst

Yeah, am I audible?

Rohan Sehgal — Whole Time Director

Yes, you’re audible.

Unidentified Participant — — Analyst

Thanks for taking my question, sir. My first question is, what is the average lifecycle of your product, I understand that you have 1,600 SKUs, considering that, like what would be the average lifecycle of your products and what is contribution of repeat orders in your reviewing.

Rohan Sehgal — Whole Time Director

So, by lifecycle, you mean the consumption, how big is the consumption in reordering or how what is the duration of the product before it is discontinued.

Unidentified Participant — — Analyst

Yes, sir. What is the life-cycle of a product mix, how long our product is being made, means the repeat order comes, after how many periods of time.

Rohan Sehgal — Whole Time Director

So, it depends on the product. We have the reusables which as the name suggests that maybe used. So, depending on the laboratory and depending on the user, they can choose to reuse it again and again, till the product cannot be used further and then will place an order again with us, that could range from a few days to a few weeks to a few months. Consumables, as the name suggests, are consumed. And there are single-use plastics and generally for high-pressure laboratories where there’s a lot of research, a lot of testing, a lot of work going on, large volumes of consumables are bought at a periodic basis and that could be weekly, that could be once in a few weeks, so it also depends on the stocking capabilities. Some people buy just in time where they buy the amount they need and some people buy for a few weeks of inventory. Customers also pick-up inventory because they may have a good foresight as to how much of product or how much of consumables they may need over the next two, three weeks, so it’s more on the ordering pattern, but as the name suggests, consumables are single-use and reusable can be used again.

Unidentified Participant — — Analyst

Got it sir. Sir, my next question is what is the — if you can give some guideline in terms of your FY ’24 revenue and FY ’25 revenue.

Rohan Sehgal — Whole Time Director

No, we are not in a position to offer any guidelines in terms of percentage or numbers, but as I’ve said earlier in one of the earlier questions that we are positioning ourselves from all fronts in terms of marketing sales activities, in terms of capex for capacity expansion, as well as the evaluation of inorganic opportunities to boost our sales for the international markets. So, from all angles we are trying to prepare ourselves to position our company for the best good possible, but it will not be possible to give a number or a percentage.

Unidentified Participant — — Analyst

Okay sir, thank you.

Operator

Thank you. Our next question comes from Omkar Kamtekar with Bonanza Portfolio. Please go ahead.

Omkar Kamtekar — Bonanza Portfolio — Analyst

Thanks for the follow-up question. So, two things, firstly, what I would want to like to know is, as a company, what kind of a competitive advantage do we have. So do we have a pricing power competitive advantage, or a product side competitive advantage.

Rohan Sehgal — Whole Time Director

So, I think we have both. And it’s, you know that’s old way. We are not the cheapest brand in the market at the lowest price brand, and but we are very well priced based on our cost to quality ratio. So we offer very fair pricing for the quality we deliver, and we have a very, very strong product advantage, I believe that we build one of the most consistent quality products available manufactured in India for India.

Omkar Kamtekar — Bonanza Portfolio — Analyst

Okay. Thank you. And with respect to the debt, so I can see there is a INR80 crores debt that has been taken. So, with respect to further expansion line, will this number increase or is this going to be because [Speech Overlap]

Rohan Sehgal — Whole Time Director

No, that is the possibility of the numbers increasing slightly, but at very, very comfortable levels compared to our earnings.

Omkar Kamtekar — Bonanza Portfolio — Analyst

Okay, okay, and are we looking at any inorganic expansion of opportunity.

Rohan Sehgal — Whole Time Director

We’ve been constantly exploring international, you know, at opportunities where which will help boost our revenue, our capacities and build, you know more stronger and closer the relationships in the international markets, and we continue to do so and whenever the right opportunity comes, we would definitely go for it. But we are in active lookouts for the same.

Omkar Kamtekar — Bonanza Portfolio — Analyst

Okay, okay, Thank you very much.

Operator

Thank you. Our next question comes from Sandeep Abange [Phonetic] with LKP Securities Limited. Please go ahead.

Sandeep Abange — LKP Securities Limited — Analyst

Hello, can you hear me?

Rohan Sehgal — Whole Time Director

Yes.

Sandeep Abange — LKP Securities Limited — Analyst

So, I hand a few questions on the overall industry in terms of your category [Indecipherable] your presence in centrifuge, cryo ware etc. So, the kind of growth rates we are expecting and seeing in your product categories back in 2020, which was somewhere around like 12% to 15% till FY ’25. What are the kind of growth guidance in terms of industry would give in terms of your product category in which you are present and [Technical Issues] as well as PCR or cell culture.

Rohan Sehgal — Whole Time Director

So the growth guidance what we gave for the industry was based on published data. So, I’m not an expert in actually building industry data globally, but all I can say is that the growth which you saw 12% to 15% was basically growth, which continued for various years, it was not primarily related to the pandemic. In the pandemic, the growth for this industry was definitely not 12%, was much higher than 12%. But what I can tell you is that all our products are used for building of vaccines, for building of newer molecules, newer technologies, new health-related opportunities and this segment is always going to be a very strong segment internationally as well as in India, and it’s going to be a segment of great importance, there could be a minor blip where there was a huge growth in COVID and now the industry is trying to recover from those two very, very strong years of COVID, but in the medium term I would see this as a very, very favorable industry poised for very, very strong growth because this industry is one of the most important talked about aspects internationally in terms of vaccine, in terms of health, in terms of eradication of diseases and so on.

Santosh Agarwal — Chief Financial Officer

And just to add, for example, in case of consumables, our revenue for [Indecipherable] is 56%, but over the year, if you see the last four years, the Tarsons revenue has been increasing with a CAGR of 17.2% right. It is much higher than the industry growth rate.

Sandeep Abange — LKP Securities Limited — Analyst

Right, okay, okay, thanks for that answer. In terms of market share, have you experienced any increase in market share over the course of last few quarters, in terms of your product [Technical Issues] being presented, etc.

Rohan Sehgal — Whole Time Director

So, again, we don’t have published data year-over-year, but what we understand from the industry especially here in India, what we see from distributor, stock houses, or what we see from the end-users, we believe that we are growing at slightly better pace than the industry, which was always the case for Tarsons over the last one and a half decades. So, we are maintaining that momentum and being able to outperform the industry once again.

Sandeep Abange — LKP Securities Limited — Analyst

[Technical Issues]

Operator

Sandeep, sorry, but your voice is not audible. Sandeep, are you there? Still we are still not able to hear you. We can only hear your voices. We move on to our next question which is from the line of Sundar with Avendus Spark. Please go ahead.

Sundar — Avendus Spark — Analyst

Thanks, Rohan, thanks Santhosh. It is couple of questions, the first one is on the delay in commencement. You’ve given in the press release that there is a delay in the utilization proceeds towards construction of the Panchla facility. Why has this been a delay and are we in line to commence it within the next six months.

Rohan Sehgal — Whole Time Director

Yes, I think the facility would be commenced in the next six months. So, a lot of a lot of construction-based activities of the entire building as I’ve been saying in my earlier calls has been completed since the last four or five months. So, the civil portion has been all completed on or before time at Panchla, but there have been delays in a lot of molds, machines and automation coming in because of the situation in the United States and Europe. It’s not being the best situations out there, and there have been delays. And there is a lot of ancillary construction activities related to these molds and machines and equipment coming in and hence the slight delay. So, in terms of placing the orders, in terms of whatever was in our control and in our hands, was completed on time or before time, but we, as I said earlier, we hope to see production being commenced in the end of Q2 when these expect a complete installation of all capacities and all new product lines over the next eight to nine months, whatever was planned in this INR500 crores to INR552 crores for Panchla.

Sundar — Avendus Spark — Analyst

Right, because the revised date as per the press release dated on 31st of January 2024, but it would be commenced much before that, right?

Rohan Sehgal — Whole Time Director

It should commence at the end of Q2, we should have that machinery and equipment coming in over the next eight odd weeks or and then there would be trial runs and so on, and we expect production to start by end of PP, but there are various machines, it’s not just one set of machines, there are various machines, so by then if everything get commenced, we expect that everything should be up and ready, I’m not talking about ramp-up, but I’m asking that, I’m just telling you that whatever was planned should be installed and ready in our facility over the next eight to nine months.

Sundar — Avendus Spark — Analyst

Eight to Nine weeks or nine months.

Rohan Sehgal — Whole Time Director

Months and not weeks.

Sundar — Avendus Spark — Analyst

Okay, perfect. And one last one is in terms of the cell culture products. How many products do we have on sales today, and what is the progress of the new product lines coming from the cell culture ramp.

Rohan Sehgal — Whole Time Director

So, cell culture we have a traded product-line and at this point of time where we are buying in our brand and selling, but we don’t have any manufactured product-line on sale, and it’s multiple SKUs. I don’t know exactly the number of SKUs, we could run into few hundred numbers of SKUs, which we would be developing and it will be available for sale.

Sundar — Avendus Spark — Analyst

I presume it should be available for sale as and when the new facilities are up and running in the next eight months.

Rohan Sehgal — Whole Time Director

As and when new facilities or as and when the new SKUs are going to be ready. So, all 100 will not be read together. They cannot have the same delivery date or the same commencement date, so as and when the schemes will be ready, they would be available for sale.

Sundar — Avendus Spark — Analyst

Perfect, Rohan. Thanks for the clarification. And that’s it from my side. I think that was the last question, and I’ll hand it over to Rohan for closing comments.

Rohan Sehgal — Whole Time Director

Thank you. I take this opportunity to thank everyone for joining the call. We will keep updating the investor community on a regular basis for incremental updates on your company. I hope we have been able to address all your queries. For any information, kindly get in touch with us or Strategic Growth Advisors, our Investor Relation Advisors. Thank you once again.

Operator

[Operator Closing Remarks]